Few would have guessed that Britain would vote to leave the European Union, and even fewer were predicting that Donald Trump would win the presidency of the United States of America. When trend analysts and pollsters are both left scratching their heads, how can any substantive predictions be made about the global economy?
There isn’t an infallible crystal ball to consult, but there are several major players to keep your eye on that will affect the global economy in 2017.
The Trump Card
President Donald Trump is easily the most divisive political figure to occupy the oval office in recent decades. He made many promises on the campaign trail, but it’s hard to know what he’ll actually do. For seventy decades the global market has been moving toward freer trade, but President Trump has continued to stress his “America First” foreign policy intentions. He has adamantly discouraged business from exporting their labor and manufacturing out of the United States and even threatened tariffs and mentioned plans to pull out of NAFTA.
Presidents can only directly control the economy so much. What President Trump can do is make certain choices that encourage others to act in kind. With influence comes power and with Brexit and the election of Trump behind us, there are some huge questions about change that influence with bring about.
The European Question
England choosing to exit the European Union was surprising for sure, but that alone shouldn’t rock the boat too substantially. What really might affect the global economy in 2017 is what Italy decides to do. Recently, the Italian public voted to shoot down an amendment to their Constitution that would greatly strengthen and centralize the Italian government. This move is just another indication of the populist sentiment sweeping the world.
If Italy decided in the future to exit the EU it could be disastrous for the economy. That move would reveal just how fragile the European Project really is, and multiple countries could slide into recession which would affect the whole global economy. If the European Union were to fall apart the economy as we know it would have to change entirely. If President Trump makes a quick and easy deal with England in the wake of Brexit, Italy might be more inclined to make that move themselves. There are no guarantees. We’ll just have to watch Italy and see what they do.
China: The New #1?
China still occupies the number two slot of influence in the global economy, behind the United States. But President Xi Jinping has made it clear that China is very eager to step up and fill any gaps left if the United States pulls away from the global market in their “America First” strategy. China is hoping for and reaching for substantial growth in 2017, but because of recent financial crisis, that might not be enough. In China, policymakers propped up their economy by providing cheap credit to invest in China’s export industry and infrastructure. This didn’t always work out well and the countries debt is soaring. China will never be able to surpass the United States as an economic power if it doesn’t take care of its own crippling debt.
It’s hard to say exactly what’s next with so many variables in flux. We know that there will always be strong global trade markets—just how strong is up for debate. But watching the above three key players will make it much easier to anticipate what’s around the corner.
Creig Wilson is author of this article, he writes about stock market, in his articles you can find a valuable infomation about how to predict stocks.