Each year brings its share of events that take everyone by surprise as well as shake up the global economy. Several prognosticators saw Britain voting to leave European Union in year 2016, even if the decision will have important implications for the global trade in the coming years. It also goes without saying that majority of the pundits and polls failed to anticipate the victory of Donald Trump in the United States.
With that said, numerous economic trends shaped the world. Whether it is the return of the fiscal stimulus under the administration of Trump or plans of Federal Reserve to accelerate the pace of the interest rate hikes, these are the trends to focus in 2017 global economy:
Europe Continues to Slow Down
If the surprising Brexit were the only problem of Europe, the European stakeholders and policy makers in the economy of the continent rest easy. However, Brexit could be the least of its worries. Analysts argue that Italy’s recent referendum reaffirmed the appeal of populism as well as anti-European sentiment, which shows just how fragile the entire European project.
It isn’t clear when the next elections of Italy will be held, yet the results of referendum recommend that the mainstream parties, which favor for unified Europe are losing their support quickly. Once Italy decides to move out of the Euro Zone and away from EU, the financial and economic effects will throw the European economies into recession.
Donald Trump, the newly elected president of the US will be embarking on substantial reform projects. One effort will a program of infrastructure spending and tax cuts that independent analysts say will expand the deficit of the federal government simultaneously that spending on the entitlements will increase. Depending on how current administration structures its infrastructure investment, this spending might be a boon to a growth going forward and one that could be purchased cheaply given the low interest rates today. However, such decisions will be made depending on the politics and economic fundamentals.
Trade Remains at the Fore
Probably, the most stable worldwide policy stance of the past few decades has been the steady march to ever-freer trade. However, the low-hanging fruit of getting rid of the trade barriers has long since it has been chosen. 2016 showed people that the electorates in the world of wealthy people aren’t longer going to brook every policy that they feel sap their income growth for imperceptibly inexpensive products and increased pay for some.
All eyes will surely focus on Donald Trump as he sets the tone for the trade across the globe. Will he consider pulling out of NAFTA? Will he set sights on reshaping the trades with China, possibly running some rules on World Trade Organization? Trump might even play an important role in the Euro Zone drama because he has indicated that he is willing to negotiate a trade deal with Great Britain, making an option to leave European Union a more enticing one for states that continue to be a member.
Gold and Silver
Precious metals will continue to be in an upward trend as long as stimulus measures continue unabated. See videos.
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