Global Economy in Focus with Hurdles in Turkey and EU

Guangdong Sheng, China – August 28, 2018 – The global economy this week saw plenty of action in all major economies. The two highlights that stand out are the rise in US stocks post the Fed meet, and the continuing crisis of Turkey’s Lira which is affecting the emerging economies.

The US interest rates will continue with the gradual increment strategy, and steep hikes are ruled out. The news buoyed up the stocks to their historic highs, followed by a decline in dollar. The most followed story however is the Lira crisis, which has affected global markets and a bear trend is expected. Turkey does not however plan to use capital controls to ameliorate the situation, which is likely to impact Europe due to the latter’s bank exposure. Italian bonds have declined and Germany is looking to control the situation.

In Argentina and Indonesia, interest rates have risen, though South Africa and US rates will remain stable. In the UK, Brexit strategy remains contentious, and one of the issues is how long to continue with the rules of the EU. China expects to meet its economic goals in 2018, though its trade war continues.

An interesting development comes from New Zealand, where foreign home buyers and investors have escalated property prices, and the country is thus taking controlling steps. In India, the Rupee has been struggling for a while due to widening trade deficit, its largest in the last five years.

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