In a previous article, we explored some actionable ideas for our personal wallets in 2017. But how about the bigger picture – the global economy? There are many things to look out for in 2017, particularly continuations and aftermaths of the happenings in 2016. Here are seven topics that we will look closely at in 2017 and would definitely keep you updated in the new year.
1. Trump presidency and impact on Asia
Donald J. Trump becoming the President-Elect to take over Barrack Obama when he steps down is probably the biggest global event that happened in 2016. It is actually quite interesting because elections were meant to be routine events but because of Trump’s political rhetoric, he essentially made it an extraordinary affair.
Now that it has happened, one of the immediate effects we must look out for is the impact of the Trans-Pacific Partnership (TPP) deal on Asia. The long-story-short version is we are one of the 12 countries involved in the TPP and while China would most probably be the biggest target, we would definitely expect an increase in prices of imported goods. This article by the BBC explains it quite succinctly.
2. Fed rate hikes in 2017
Just a year ago, the US Federal Reserve (Fed) raised the Federal Fund Rates target range by 25 basis points. Fed Chairwoman Janet Yellen mentioned that they were expecting about another four rate hikes in 2016. It never happened till just a few weeks ago. This time round, the Fed said that they expect another gradual round of rate hikes in 2017. It is hard to believe them this time round but we can never be too safe, can we?
3. Brexit and Article 50
When the United Kingdom withdrew from the European Union (EU), everyone thought that it was the end of the world. The Pound Sterling dipped more than 10 percent before rebounding afterwards. Probably because people started realising that Brexit didn’t mean that the UK was going to leave the EU overnight. Nevertheless, as Theresa May took over David Cameron as the British Prime Minister, we should see Brexit materialising 18 months from July 2016 (at the earliest) so it shouldn’t be a huge problem for 2017. But we should expect some gradual shifts as the UK gets ready. Trump’s impact should be more significant in 2017, though.
4. OPEC deal and oil prices
In a recent contribution by Sing Saver Singapore, they shared some insights into how the OPEC deal might affect us Singaporeans. After oil prices plunged by almost 80 percent back in 2014, oil was pushed into the background of all the other economic matters. But as the new OPEC deal is materialising – OPEC members agreed to cut production – oil prices might start to climb back up, albeit not at historical speed. For investors who are well-versed in oil, this is definitely something to look forward to in 2017.
5. The (ever) falling Ringgit
This chart from Bloomberg pretty much sums up how badly the Ringgit has performed in 2016. Even then, the Malaysian Ringgit (MYR) is not the worst performing currency of 2016. As some would say, the MYR can’t drop forever; it has to rebound at some point, right?
6. Property prices in Singapore
Property prices have been dropping (especially so for resale property). Of course, not every single piece of property in Singapore saw a drop but you get the idea. House prices are going down and that isn’t good for inflation and growth. The reality is, prices have climbed way too fast and way too high. It shouldn’t be a surprise that prices are down but will it continue to drop?
7. The next global financial crisis?
Bearish economists around the world and some of our regular speakers at our half-yearly Shares Investment Conference (SIC) have been talking about a potential financial crisis hitting us for more than a year now. But no one will know for sure when it will hit us. Just look at the past – it always hit us when we least expect it. Therefore, we can never be too safe by saving up and having cash on hand. We wouldn’t want to be caught in a position where we regret not playing it safer.
Personal finance tips
If macroeconomics isn’t your cup of tea and you’re looking for something much more actionable on a personal level, here’s an article for you that was previously published. Personal finance and money management is important but it never hurts to know a thing or two about what’s happening in the global economy, right? The Shares Investment research and Aspire editorial teams wish you a prosperous new year in 2017!