International Environment of Business
The
Emerging Global Scenario
In Modern times, no state can
afford to live in isolation. The economic liberalisation and the increasing
trade in commodities and services under WTO have been responsible for
accelerating the pace of progress towards the borderless world. Before slowing
down in the year 2007 the world economy maintained its momentum with estimated
overall output growth of 3.4 % for fifth consecutive year. The pace and momentum
of the global economy was slow in 2010 (4%) and 2.7% in 2011, 2.2% in 2012.
Many economies continued to perform below average and the growth in 2013 was
2.4%. It will slightly recover in 2014 to remain at 3.2%. The world output
growth remained slow in the year 2015 at 3.1 % and in 2016 at 3.2%.
(1) Boom in the World economy: The strong
demand of primary commodities including Africa contributed to the improved
external and fiscal balances. These have paved the way for more expansionary
policies, and for a wide spread recovery in interest rates. Although problems
of strategies of development pattern and rates of growth may vary all national
economies were on growth path till 2007. Africa also achieved a growth rate of
6 per cent in 2007, while growth rate in Latin America and west Asia was around
5 per cent. Indeed, since the beginning of the 21st century till
2007 per capita GDP in Africa, West Asia and Latin America has increased by
more than 15 per cent, a rate not seen in these regimes since the early 1980s.
China and
India performed well and continued the fastest growing economies, but the US
recession had put a break on the speed of these economies. The performance of
developing economies had also been impressive during 2003 to 2007 per capita
GDP of these countries increased by 30% compared to 10% in the G-7 countries.
After the extended period of excessive growth China’s growth rate has slowed
down mainly by slowing down of investment and export in 2015-16. The slowdown
had affected many economies of the world as China is the top 10 trade partner
of more than 100 countries that account for nearly 80 % of the world GDP. These
trade effects are both direct (reduced demand for trading partners’ products)
and indirect (impact on world prices for specific goods that China imports––for
example, commodities), affecting other countries’ exchange rates and asset
markets.China is a major importer across a range of commodities, especially
metals, for which it accounted for about 40 percent of total global demand in
2014. China’s investment slowdown has had a significant impact on the demand
for and prices of those commodities. Excess capacity of Chinese manufacturing
sector has contributed to the lowering prices.
(2) Growing exports and net capital outflows from developing
countries: The dynamics of overall growth in developing countries have been
stimulated by strong growth in developing economies. Real exports of developing
economies more than doubled during 1998 to 2006 where as those of G-7 rose by
less than 50 per cent. As a result of this the share of developing countries in
global trade rose from 29 per cent in 1996 to 37 per cent in 2006.
Table-2 : Percentage Change in Volume of
Foreign Trade
S.No.
|
Export
|
Import
|
||||
1990-2000
|
2005-2010
|
2010-2015
|
1990-2000
|
2005-2010
|
2010-2015
|
|
World
|
8.1
|
6.3
|
1.5
|
6.6
|
5.9
|
1.4
|
Developing
Economies
|
10.9
|
9.2
|
2.7
|
8.6
|
10.4
|
3.0
|
Transition
Economies
|
12.2
|
9.4
|
-2.6
|
1.9
|
12.1
|
-2.9
|
Developed
Economies
|
6.6
|
4.3
|
0.8
|
2.1
|
3.2
|
0.5
|
Source: Handbook of Statistics, UNCTAD 2016
World trade expanded vigorously in 2006 and
total exports grew by almost 15 Per cent in current dollar prices with an
increase in volume terms of 8 per cent and in unit value terms of 6.5 per cent.
In 2006 export, expansion was evenly distributed among developed and developing
countries. USA also registered strong export growth of 10 per cent its highest
since the beginning of the 2000s. China and India also experienced higher
growth in export volumes e.g. China got 25% growth whereas India’s export
growth was 14 per cent. Global
merchandise trade second time in the new millennium first in 2009 and then
again in 2015.
The export
performance of other countries in East and South Asia was also good. The
factors responsible for this robust growth were growing global demand and
increased intra regional trade in manufacturing. Greater integration with EU is
also the reason for increasing trade volumes in South-East Europe, but in these
countries and CIS growth in imports (by volume) was higher than growth in exports
(by volume).
Export performance (in volume
terms) was less buoyant in Africa, Latin America and in Caribbean and West
Asia. In the year 2004, these countries experienced a rapid expansion in oil
exports that could not maintain its momentum in 2005 and 2006 before slowing
down. Export volumes were relatively stable in Africa and west Asia and
increased by 4 % in Latin America and Caribbean.
Export of developing countries in
value terms have consistently been growing faster than those of developed
countries in 2000s. As a result, the share of developing countries in global
exports increased from 32 % in 2000 to 37 % in 2006. China received highest
share in this growth. By contrast, the share of developed countries fell from
65.6% to 59.1% during that period.
(3) Impact of WTO: Future developments in world
trade and in the performance of the global economy will be influence largely by
the Doha Round of Multi-lateral Trade Negotiations under aegis of WTO. These
negotiations, require strong political will to achieve a truly development
oriented outcome. In 2009, Government of
India took initiative to break the deadlock and made efforts for early
conclusion of Doha Round of Trade Negotiation in all three areas manufactured
products, agriculture products and Services. The objective of the meeting of
the Trade Ministers was to narrow the differences and conclude the Doha Round
in the next few months. Looking at the
Trade and growth relation it was assumed that this would benefit all. But nothing substantial came out and finally
the Doha Round of Trade Talks which were continued for 10 years finally reached
a dead end and in the Ministerial Level meeting held in Geneva was finally
declared dead in the year 2012. The
failure of the Doha round has made many countries, including India, to enter
into other forms of preferential agreements, either bilateral (India-Japan) or
plurilateral trade negotiation (India-EU, India-ASEAN). The Ministerial Talk at Bali in December 2013 under
the leadership of Roberto Azevedo said nations pursuing regional and bilateral
trade accords threaten to hamper efforts to revive global trade talks.
(4) Higher Demand: The growing
population the rising income and the new conducive policy environment will
attract more investment into developing countries. The commodity producers
continued to benefit from the boom in the commodity markets, which has started
in 2002 and continued for a long. Indeed the growth in non-fuel commodity
prices strengthened in 2006 at a rate of
30.4% the highest since the start of upswing.
Table: 2 World Primary Commodity Prices
(Percentage
change over previous year)
S.No.
|
Commodity
group
|
2001
|
2006
|
2002-06
|
|
1.
|
All
Commodities (in current $ prices)
|
-3.6
|
30.4
|
88.8
|
|
2.
|
Food
and Topical beverages
|
0.4
|
17.8
|
48.4
|
|
3.
|
Vegetables
oil seeds and oils
|
-6.4
|
5.0
|
26.4
|
|
4.
|
Agricultural
raw materials
|
-3.9
|
15.0
|
62.3
|
|
5.
|
Mineral
ores and Metals
|
-10.8
|
60.3
|
219.9
|
|
6.
|
Crude
Petroleum
|
-13.3
|
20.4
|
157.6
|
|
7.
|
Manufactured
goods of Developed countries
|
-2.1
|
3.3
|
25.3
|
Source:
UNCTAD Reports
Price hiked continued for almost
all commodities till 2007before slowing down although the rate of increase
varied by commodity and commodity group. The strong demand for commodities
stemmed mainly from robust global economic growth in the US and the rapidly
expanding developing economies, such as China and India. The Chinese demand for
commodities has had the greatest impact on the prices of metals and minerals,
agricultural raw materials and some food commodities such as soya bean.
(5) Higher Energy Prices: Energy
prices of crude petroleum, have influenced the price trend of many other
commodities in recent years. Crude
petroleum price remained high and
volatile for a long. Further the growth in petroleum consumption has also
affected the budgets on many developing countries.
(6) Global Imbalances: The sources of sustainability and possible
adjustment of widening imbalances in the world economy have triggered one of
the liveliest and more controversial economic policy debates in fast few
decades. For some observers and politicians, the fact that imbalances
correspond to a real transfer of resources from surplus to deficit countries is
just a natural and harmless consequence of an increasingly integrated world
economy. However, the actual pattern and the level of imbalances are a source
of concern for those who believe that the size of any transfer of resources
should remain within the expected long run capacity to pay interest and the
principal. Therefore, the substantial net
capital flows in one direction over many years is indicative of
fundamental problem with the allocation of capital in the world economy since
the aftershocks of big financial crises in Asia, Latin America and some
transition economies. From this
prospective it is concluded that adjustment is imminent and can be either
“soft”( i.e. with a smooth policy-induced correction) or “hard”( i.e. with a
painful contradiction and crisis in deficit countries and major adverse
repercussions on surplus countries).
The competitiveness of the economy
is influenced by the sign of its trade balance. Indeed, large corrections of
deficits are usually observed to go hand in hand with huge devaluation of the
nominal and real exchange rate induces an expenditure switch from demand for
foreign goods to demand for domestic goods, which is reflected in improvement
in trade balance and vice versa in case of an appreciation. The countries with
large deficit devalue their currencies and gain in competitiveness. Thus, there
seems to be a nexus between the exchange rate and trade flows. Experts believe
that if the Chinese currency the ‘renminbi’ were allowed to float freely it
would reduce the biggest surplus in the world and the biggest deficit at the
same time. The rising current account deficit accompanied by a real
appreciation and a loss in overall competitiveness is a much stronger indicator
of non-sustainability.
Surplus countries’ currencies
should face an appreciation in real terms. Sometimes prices and exchange rate
moves in to the wrong direction. This is “false pricing” and it is a common
phenomenon. The paradox of false pricing can be seen in number of surplus
economies with officially floating rates where there currency has actually
fallen (there competitiveness has increased), further lowering the prices of
their products on the world market.
The paradox deserves greater
attention in the debate about remedies for global imbalances, even if the
reasons for the real depreciation of currencies vary. In case of yen and Swiss
Frances there real depreciation can be explained by so called “carry trades “,
which occur when there are large differences between the expected nominal
return on investment. If the financial markets systematically distort the
competitive positions of nations and companies, policy intervention is
unavoidable, eventually. The activities of hedge funds at international level
will have to be closely watched for success of the floating rates.
(7)
Globalisation and Regionalisation[1]: Developing
countries seek to integrate into the world economy in the expectation that this
will help raise productivity levels improve growth prospectus and boost living
standards through increased trade, technology and capital flows. Most observers
recognise however, that deriving such benefits from “external integration” is
contingent on a number of pre-conditions, including a certain level of local
production capacity, skills and technological sophistication, an array of
market supporting institutions and good infrastructure. Establishing such
conditions is closely tied to a process of “internal integration” associated
with expanding domestic markets and shifting pattern of employment away from
rural activities, and an increasing industrial division of labour that leads to
a dense network of input-output linkages between sectors. Strong institutions
are also required to forge the socio-political consensus needed to mobilize and
channel resources to productive investment and to manage trade-offs incurred along
a dynamic development path, including those arising from increased external
integration. Accordingly, political institutions with democratic governance are
important development strategies.
Each of these components is
important for development: strong property rights, open markets and good
governance are important with deeper integration with world economy. It is
argued that resources generated will help and sustain growth and development at
local level. Trade and development Report looks at whether and how regional
integration and cooperation might help strengthen development policy agenda and
rebalance international economic governance. The common belief at international
level is regional; cooperation among developing countries has the potential to support
national development strategies and to some extent fill the gaps in the global
economic governance system. There is considerable body of literature mostly
derived from international trade theory
which views this trend with alarm believing it distracts (or even
subtracts) from the optimal gains it deem possible from a truly open global
system. The regional agreements may have played some role in boosting regional
trade and investment at the expense of multi-lateral transactions but this is
not conclusive that openness increase welfare gains.
Thus, it is clear from above
paragraph that governments of different countries have been taking various
measures to improve their economic competitiveness and to protect their
interests. There has been a significant increase in the number of trade
agreements during recent years. For example the number of RTAs were about 308
until 2008 have increased to 575 till July 2013 of these 379 were in force.Now
the question is what are the motivational factors that play key role in the
formation of Trading Blocs:
1. To achieve economies of scale
through production on large scale
2. Strengthening political ties
3. Managing migration flows
4. To ensure market access
5. To improve bargaining strength
in multi-lateral trade negotiation
6. To protect regional infant
industries through guaranteed regional market
7. To prote4st against slow pace
of trade negotiations and protect their strength
Some important regional blocs are
as follows:
The European Economic Community
or European Union (EU)
The North American Free Trade
Agreement (NAFTA)
Asia Pacific Economic
Cooperation(APEC)
Central American Common Market
(CACM)
Southern Cone Common Market
Latin American Integration
Association
CarribeanCommunityu and Commom
Market
Cross Border Initiative
East African Cooperation
Economic andMonetary community of
Central Africa
Economic community of
West-African States
Common Market for Eastern and
Southern Africa
Association of South-East Asian
Nations (ASEAN)
South Asian Association for Regional
Cooperation (SAARC)
SAARC Preferential Trading
Agreement (SAPTA)
Comprehensive Economic
Cooperation Agreement
2016 will be a challenging and difficult year for the
global economy.Anders
Borg, Sweden’s former Finance Minister
Global growth is picking up somewhat after a number of
weak years. A global GDP growth rate of 3.5%, the latest IMF forecast, is lower
than the 4.5% average that preceded the decade before the great recession, but
it is better than the average over the past five years.
The US and UK recoveries are self-sustained, but
weaker than during a normal post-crisis period. In the Eurozone, expansionary
policy is still called for and further steps to support growth could be
expected. In the US and Europe alike, investments levels are low, productivity
growth is very weak and the export sector is only providing a small
contribution to the recovery. At the same time growth is slowing in Asia and
world trade is likely to grow at a slower rate than GDP. It is a recovery
without a real upturn in the business cycle, threatened by a range of factors.
One: the year of political populism?
2016 could become a year marked by political populism.
Weak economic activity and low productivity growth mean that real wages and
consumption are likely to continue to be disappointing. When reality is coming
short of expectations, there are grievances to be exploited. Donald Trump,
Jeremy Corbyn, Alexis Tsipras, Nigel Farage, Marine Le Pen, Bernie Sanders,
Pablo Iglesias Turrión and many others are taking advantage of stagnating
living standards and increasing economic insecurity.
A number of factors are reinforcing populism
and discontent. Job security is undermined by global competition,
digitalisation and robotisation. New work opportunities ahead are more likely to
be short-term contracts, part-time jobs, self-employment without full social
benefits and full job security. The so-called “Uber” class of insecure workers
is a new reality to be dealt with. The demands for education, expert knowledge
and social skills have taken a quantum leap upwards and increased the threshold
for people seeking to enter the labour market. Unionisation is on the retreat.
Increased insecurity in labour markets, the weaker negotiation power of the
unions and low productivity are setting narrow limitations for wage
negotiations and real wages.
In a period when most advanced economies needs strong
governments to implement far-reaching structural reforms, voters are favouring
short-termism and asking for simple solutions. To restore political trust,
governments needs to deliver real wage increases, more jobs and better welfare.
This can only happen if growth is revitalised by reforms to increase labour
market flexibility and to improve the business climate.
There is a clear risk that the fear of political
populism will undermine the way leaders deal with long-term challenges and
thereby creates a vicious negative spiral where disappointment further weakens
trust in governments.
Two: global insecurity and the refugee crisis
US presidential elections was a major political event
during 2016. From a global perspective, the key issue is whether the next
president will be able to restore the US as a global force for stability after
the apparent lethargy of President Obama’s administration. Another period
of a United States that lacks direction in its foreign policy, combined with a
reluctance to engage with military forces in difficult regions, will create
deep security problems.
Europe needs to step up its ability to deal with
emerging security issues, although that is an unlikely outcome without
leadership from the USA. The tragic events in Paris have created a momentum for
a coalition bringing the US, France, the United Kingdom and, unexpectedly, also
Russia together for a push-back of the Daesh ambition of establishing a
Caliphate. It seems necessary for the US and Europe to be ready to actively
counter extremist Islamic terrorism in the Middle East, North Africa and
Afghanistan in the medium term as well as in the long run. To leave large areas
and regions under the control of Daesh, Boko Haram, Al-Shabaab or the Taliban
is a global security risk.
The refugee crises in Europe will remain a major
factor during 2016. UN estimates indicate that over one million people
have entered Europe with the intention of claiming asylum during 2015. On a
global level, UNHCR has stated that the number of forcibly displaced people
reached almost 60 million in 2015, an increase of some 40% since 2014.
Germany, Sweden, Hungary, Austria and Italy have been
the most affected countries in Europe (Hungary and Sweden with the highest
per capita numbers, and Germany with the highest number in absolute terms). In
the last few weeks, the inflows have decreased. Partly that could be due to
temporary harsh weather. The fact that the European Union has made a broader
political agreement with Turkey could also be a factor.
In addition, Daesh will face a stronger counter
insurgency efforts during 2016. If Daesh is pushed back and insecurity reduced
in Syria and Iraq that is likely to further improve the situation. It should
however be pointed out that some 4 million refuges from the conflict in
Syria-Iraq remain in the neighbouring countries (in Turkey 2.2 million, in
Lebanon 1.1 million and in Jordan 650,000 people).
The historical pattern has been that it takes a few
years before the refugee numbers normalise after a period of conflict. The
intensified challenge from the Taliban in Afghanistan could also increase the
number of people claiming asylum in Europe (about 100,000 people have come from
Afghanistan to Europe during 2015). The number of refugees coming to Europe is
most likely going to be lower in 2016, but they will remain much higher than
the long-term average for both 2016 and 2017.
The short term economic consequence of the high
migration flows will be somewhat higher GDP growth in Germany and Sweden, due
to a temporary increase in public expenditure. The consequences of a growing
population is positive in the long term, reducing the demographic pressure of
an ageing population. Increased internal globalisation, to use the term coined
by Angela Merkel, is potentially a more diversified work force and a more
creative economy.
In the short term, the task of integrating such
a large number of people will be a challenge. In Sweden the historical
experience has been that people from Syria have integrated well into the labour
market. However, to be able to integrate a large number of people coming from a
much less developed country (GDP per capita in Syria was 5000 USD before the
conflict, which is slightly more than 10% of the level in Sweden and Germany)
will be complicated. To strengthen integration, countries need to increase
labour market flexibility, boost spending on early education efforts and
active labour market measures and streamline welfare services, but both in
Germany and Sweden this will be very difficult. Looking ahead it is likely that
unemployment will be somewhat higher in 2017 and 2018 and this will dampen wage
pressure and inflation pressure somewhat.
Three: the referendum on Brexit
The United Kingdom has decided to exit from the
European Union. The economic and political consequences of a British move
towards isolationism are devastating.
The political balance in Europe would shift from the
idea of a Europe open to free trade and dynamic markets, turning the balance
towards a more bureaucratic and centralising perspective. Europe and the
UK would both be in a much worse position in the competition with the
United States, China, Japan and India. For the UK, the long-term economic consequences
are likely to be deeply concerning. Without full participation in the European
Union, London’s role as the financial centre of Europe would sooner or
later be put into question. The populists are creating the impression that it
is costless for the UK to move away from Europe, but that is a dangerous
illusion. The Danish referendum set off a wave of financial turmoil back in
1992 and the implications of Brexit would be more far-reaching.
One factor to bear in mind is that voters often seems
to favour the status quo when uncertainty is high. When almost all economic
experts, the traditional political parties and the larger parts of the business
sector are arguing for a “yes”, this should be the most likely outcome, but in
the age of populism uncertainty remains high until the ballots have been
counted.
Four: Russia’s role in the world
Another political factor contributing to financial
uncertainty is Russia. At the end of 2015, President Putin has rapidly
repositioned Russia from being the outsider rocking the boat to a constructive
force dealing with Daesh in Syria and Iraq. The repositioning is obviously
fragile. Putin has in no way backed down in principle from the aggressive
stance in the conflict in eastern Ukraine. So far the Russian intervention seems
to have provided more support for President Al-Assad than actual damage to
Daesh.
In the long run, Russia is likely to be a declining
power under the current regime. Low fertility rates and premature
alcohol-related death among men, combined with excessive dependence on natural
resources rather than productivity and innovations, are undermining the
long-term prospects. But in the short run, any neighbouring country that shows
signs of weakness face the risk that Russia will try to exploit the situation.
President Putin has been a master of navigating the age of populism and could
revert to the anti-western rhetoric at any point of time.
For the coming years investments in Russia will be
perceived as risky. A solid recovery in Russia will only come if foreign
investors become convinced that the U-turn in Russian politics of late
2015 is the first step towards a Russia that is open for co-operation and ready
to reform its archaic economic structures. Until then most investors will
hibernate and hope for a thawing in the Russian tundra.
Five: weak growth, choppy markets
Global growth will be weak next year. Furthermore, we
are also likely to see substantial turmoil in financial markets. The
combination of the recovery in the US and, even if weaker, in Europe, as well
as a deceleration of growth in China is creating uncertainty for the financial
markets. The extraordinary monetary policy measures over the last few years
have pumped short-term money into the global financial system. In
combination with low liquidity in markets, partly due to the new regulatory
structures that are reshaping banking everywhere, this has set the tone for
turbulence.
The key factor deciding the degree of turbulence will
be inflation in the US and reforms in China. If inflation is picking up in the
US and the Federal Reserve is perceived to be behind the curve, this could push
US rates higher and reinforce the appreciation of the dollar. The best guess is
that inflation will remain subdued in the US. A weak consumer recovery and very
low resource utilisation is unlikely to give a demand-driven inflation push.
The potential for accelerated productivity growth out of the broad
technology-driven shift that is now taking place should also keep cost pressure
under control.
The traditional models that the Federal Reserve and
other central banks are using to forecast inflation are backward-looking and
are unlikely to capture the fast moving technological development that we are
now seeing. On the back of higher than expected productivity it is also
possible for the unemployment rate to gradually go lower without pushing a
traditional wage and inflation spiral.
2016 could potentially be a year when the implications
of the digital transformation become a dominant theme. The potential is clearly
there. Many start-up companies have been printing very strong growth numbers
for years, but the macro-economic impact has so far been on the weaker side
because the growth has come from a low level. Every year this is gradually
changing. When more and more people do their shopping and banking online that
will also mean that the broader implications becomes more pronounced. The
pressure on existing firms to adapt to increased competition is likely to mean
that prices and profit margins are being squeezed.
A more problematic impact could be that employment
growth is held back during the recovery. So far that has not been the case in
the advanced economies. The labour market in the US has been strong, but that
has also been the trend in the United Kingdom, Germany and the Nordic
countries.
Six: China’s reforms
If inflation expectations in the US are
a key factor shaping the financial year of 2016, reforms in China are on
another scale. If China is able to gradually move forward with rebalancing
the economy from investments to consumption, that could open a path towards
more sustainable growth and a gradual return of optimism in the Chinese
business sector.
The Chinese government has many times, not least at
the last meeting in Davos and at the Dalian summit, stated its ambition to push
forward with reforms to open the economy and continue the transformation
towards a well-functioning market economy. The downside risk seems to be that
these reforms are dependent on the ability to deal with resistance from special
interest groups, including state-owned enterprises and more conservative
centres of power. For the global economy, it is key to monitor any sign that
reforms are being accelerated and that resistance to change is being pushed
backwards.
Any sign that a credit contraction is
hampering growth would imply that it is necessary for the People’s Bank of
China, PBOC, to push monetary policy in an expansionary direction. In such a
scenario, the RMB would weaken and that would imply second round depreciation in
the rest of Asia. In any such scenario we would also see continued turbulence
on commodity markets as well. Commodity prices are likely to contribute to
the low-inflation environment. It will take time before we see the recovery of
the super-cycle.
It is important to underline how important China is
for the rest of the emerging market countries. Growth in Asia, Latin America
and Africa has been bolstered by the growing demand for iron ore, copper
and oil from China. If China succeeds in dealing with domestic challenges, that
would also contribute to reviving optimism in emerging markets.
It is, however, important to underline that the
renaissance in emerging markets has a more fundamental basis than just
being derivative of China. India, Indonesia, Bangladesh, the Philippines,
Brazil, Mexico Colombia, Nigeria, Ethiopia and East Africa have been able to
accelerate growth out of their own power. Political reforms have improved
governance. Barriers to trade have been reduced. The regulatory burden and the
cost of doing business have been reduced. The education level of the workforce
has improved. The mobile revolution has made information accessible almost
everywhere and increased political transparency.
Emerging economies will be under market pressure
during 2017. In this rather difficult environment, it would
be a critical moment if external pressure translated into a push for
economic reforms. If the governments in Brazil, Turkey, Nigeria or Russia would
see market pressure as an argument for reinforcing structural reforms that
could be game changer. So far the response has been far from convincing.
It is important to take on board the fundamental
optimism that globalisation is bringing to emerging markets. According to the
IMF forecast for 2016 there will be more than 3.4 billion people living in
countries with a GDP growing faster than 6%. A growth rate of 6% means that the
total economy will triple in two decades. That is the fastest transformation
out of poverty that humanity has ever experience. Whether 2016 will bring a
revival of the fundamental emerging market story or a year of disappointment is
an open question, and the more market pressure is seen as an argument for
reform the better the outcome will be.
2017 is likely to be a difficult year. Growth is
increasing, lead by the recovery in the US and other advanced economies, but
populism, geopolitical risks and market turmoil are likely to cast some shadows
over the optimism. The US favour of protectionism, the policy of ‘America first’
will have long lasting implications on the front of trade and international
politics.
*****
No comments:
Post a Comment