Appreciation of the dollar and with interest rates already squeezing emerging economies, and just as President Donald Trump’s trade war threatens China; the US is set to be the only G-7 nation to see an economic growth accelerate this year as Trump’s tax cuts digs in.
Making America great again isn’t proving so great for other regions of the world. Natwest Markets notes its box of so called growth assets such as the Australian dollar and copper is down about 4.5 per cent gain of the S&P’s 500 index.
The global backdrop will frame discussions on the issue when the Federal Reserve holds its annual policy meeting in Jackson Hole, Wyoming, at which Chiarman where Erome Powell will speak.
According to reports, the Fed’s two interest-rate hikes of 2018 have helped in lifting the dollar to almost a 6 per cent on a trade-weighted basis this fiscal, making it costlier for international borrowers to repay their loans.
“The gap in performance certainly captures the imbalanced nature of growth this year,” opined, head of cross asset strategy at NatWest, Jim McCormick.
Furthermore, China’s momentum has stalled as policy makers curb risky lending, and the trade dispute with the US begins to hit, prompting policy makers to change pace to signal a willingness to support movement. It was also stated that economists also see a slowdown in Japan.
Across much of Europe, meanwhile, surveys and confidence indicators have partially turned lower this year because of export concerns. German factory orders—a gauge of future output in the euro area’s largest economy—posted their first annual decline in almost two years in this June.
Robert Subbaram, a finance expert asserted, “It is no longer a question of if but more a matter of how much Asian Growth will slow in the second half.” Last week India saw a big crashed down of Rupee against Dollar value. That happened followed by Turkish Rupee going down and US-China cold trade war.
Gauging the situation experts felt that all these factors will come and go, but the developing countries, nevertheless, will continue to suffer as usual.