Tuesday, November 1, 2016

TIME BOMB OF GLOBAL SLOWDOWN ....2017

The global markets are already under intense pressure due to geo political reason and further due to the upcoming sea of problem which will hit the global markets. I find more slow down to come up for exporting countries and less demand from Middle East and European countries. Well these two countries make a good % of export for any economy. Middle problem is due to the low crude prices but now the heat of the low crude prices will hit the global exports. Middle East particularly Saudi Arabia is aggressively going ahead for cut down in its spending. Government ministers have been entitled for a 20% pay cut where as for junior employee’s bonuses and slashing paid holidays.  Further New foreign national hiring’s being capped so as to increase hiring of local people.   Taxation policies are also being implemented by the government which will further reduce the consumption thrust and more prune towards savings. The problem will amplify more as Saudi nationals are more educated in terms of Oil rather than on any other subject which will help them to balance their economy on an immediate basis. This is one of the biggest threat for transition economy and the latest example being China. So, most of the government facilities are being cut down which means more of savings and less of consumption and less demand for export. Please note that 70% of the of the Saudi Nationals are currently employed by Government and hence this austerity measures reduces significantly consumption appetite.
 
Europe is already under the threat of Brexit and also the upcoming elections in 2017 across many member states. Most of the problem is that referendum is being called to exit EU which is a big threat for the global trade and investments. German presidential election, , French presidential election, 2,French legislative election, ,German parliamentary election, ,the Netherlands general election, ,Norwegian parliamentary election,  are the few of the elections will keep enough pressure on the global economy. Any country getting out from the EU will be big blow to the global economy. Further I fear and confident that Big Banks of EU might grow for toss which will add fuel to the global economic growth and will trigger safe assets flights. Already the bad loan numbers are increasing and banks are more stringent to lend and hence hardly any circulation of capital will happen which is highly required for economic growth to happen.

Now US elections are also on the wings and Mr. Trumph winning will create enough panic and problem for the global economy, trade and flow of investments based on the statements of the candidate.  Another factor which will keep the global markets under pressure is the lack of any positive news as earnings seasons are going to over in the few days and more pressure will be on the upcoming new policies being announced by the US government after the new President comes into picture. If Trumph wins global markets will be under pressure but I fear that more pains will come from algorithm trading points where complex trading methods have been adopted which remains under quite darkness. Currently everyone is focusing on US Fed rate hike well I am more concerned about upcoming trade and investment policies which will affect many economies.

Financial analyst have also created a mess up where as commodity prices reduced profitability increased despite of negligible growth in sales/ revenue. Now as prices are climbing but sales are declining the realty of growth is hardly visible. There is big gap which have been created through improved EBIDTA margins and PAT Margins but now the same is going to be narrowed. The real picture for slow and weak export will come up as sales growth will hardly happen.  


Social benefits will be reduced significantly over the coming decade across the globe as government are bankrupt and bear inflation based living is also a problem for the government. Governments have created a problem through leveraged and toxic deals which has pushed the burden of living at retirement on the old aged people. This will spook more problems within the societies.

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