An upturn for the economy?
After a period of sluggish performance, the US economy may be set for an unexpected upturn. The incoming Republican administration seems determined to throw all its resources into boosting the economy which, together with the much-touted trade restrictions shoring up the price of imports, is almost certain to fuel inflation above the average 2.2% of Obama’s second term.
While under Barack Obama, labour regulation and environmental legislation expanded greatly – witness the scope of Obamacare, for instance – its subsequent contraction under Trump may well encourage businesses to start investing again.
New currency options
Since crypto-currency bitcoin’s successful transition from experimental concept to globally accepted currency with a market value of more than $10 billion, central banks have become interested in investing in exploring the potential of digital currencies for themselves.
Countries including the UK, Russia, Canada, Australia and China are now looking at options for creating their own digital currencies and, while research is at an early stage, there’s a general recognition that the introduction of digital currencies is inevitable.
Oil prices soar as Opec deal nears agreement
In a landmark agreement thrashed out at a November meeting in Vienna, oil cartel Opec has agreed to cut supplies for the first time since the global financial crisis, causing prices to soar to the $50-a-barrel mark. The 13-member-strong cartel is responsible for pumping a third of the world’s oil, so the announcement that it would cut production by around 4%, equating to a reduction of 1.2m barrels a day, was big news on the markets.
The agreement represents an about-turn for Saudi Arabia, which has been committed to rising output over the last two years in a bid to torpedo the profits of US shale and other high-cost producers. The new cuts are designed to push prices upward from a $50 floor.
A memorable year
2016 has certainly been a year of surprises. After what seems like decades of ‘business as usual’ in Europe and the US, the steady march of globalisation and the apparently inexorable rise of liberalism, recent political and economic events have turned the old order upside down.
Donald Trump’s US election win coming hot on the heels of the UK’s vote for EU Brexit, coupled with a worrying slowdown in Chinese economic growth and historically low interest rates have not only created uncertainty on the global stage but are also creating significant risks for the global banking sector, according to leading ratings agency Standard & Poor.