Outlook for 2017 (2 of 2): Revolution in the Air
With the political outlook certain but their actions now in totally unknown territory it is virtually impossible to make any accurate economic predictions for 2017. So to 'blog' about the outlook for the economy one must do exactly that and make some calculated predictions. They are..
The Trump presidency;
Donald trump is a longstanding economic nationalist. A person who believes that free trade has destroyed America's economy. As a result, There could be large tax cuts coupled with a largess in the new government's spending (Keynesian style). This would bust America's budget and deliver jobs. Trump's popularity at home would soar and congress would have to continue to vote for printing money, something that was always a game of poker with the Obama administration.
Trump's actions would have a bad effect on the rest of the world, only to be felt through 2018 and beyond once the full effect is delivered. The effect will be the weakening of the dollar and then the currency possibly moving from being the world's reserve haven. America would not be buying nor importing goods and demand would slacken in exports from China, Europe, the Middle East and the Africa's.
Theresa May's government will invoke article 50 by the end of March. A sudden wave of realism will pass over the country. However very little will change. Short term differentials in currency, interest rates and government borrowing will occur. However, other markets will be created, especially with Trump's nationalism coming to the fore. This could be the golden opportunity for an entrepreneurial Britain. Strong, concise and clear leadership is required, particularly from the Chancellor. Encourage export, invite entrepreneurs, and do not protect the currency!
'Carpe diem' has been said before but this is the time to step in, with both size 9's not leopard print designer shoes!
The G7 must get to grips with invoking stronger measures on countries avoiding compliancy. This will make the world wide playing field fair. Above all it is the world's responsibility to future generations to ensure that climate change is controlled.
China will need to come to terms with itself, it's market share, the mix between the communist regime and the private sector.
Any external event can throw the worlds economy off balance.
This is not likely to be a world war, Russian intervention in Eastern Europe nor continuing Middle Eastern strifes, but these are likely to be;
- Stronger than expected isolationist measures by Trump
- Unexpected oil price changes from oil producing countries
- A return to inflation in Western economies from Keynes economics
- Stranger than expected results from France's & Germany's elections resulting in the immediate break up of Euro land
- A country going 'bust'
Watch 2017 with interest and then 2018 to 2020 can be predicted..