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Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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January 2017 | World Economics


World Economics Monthly - Outlook

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Trump victory results in an unlikely bounce in US market sentiment...
The unexpected victory of Donald Trump in the US presidential election had precisely the opposite impact on the US stock market than had been predicted. Investors are betting that infrastructure investment will stimulate the economy, whilst at the same time hoping that his anti-free-trade rhetoric turns out to be hollow.

...with consumers also enthused
Consumers have also responded positively, with the University of Michigan’s consumer sentiment index rising from 87.2 to a six-month high (and the second-highest reading in 17 months) of 93.8 between October and November. A significant difference was noted in the responses of those surveyed pre- and post-election (with the latter group being more positive).

China puts the brakes on runaway property market
With the Chinese residential property market on a tear since last year, the level of household debt has risen to more than 40% of GDP. This has prompted the government to instruct the country’s banks to tighten lending criteria. Historically, economic growth driven by asset-price inflation has usually ended in tears, and Chinese growth seems likely to slow in the medium term. Significantly, exports fell for the seventh month in a row during October, decreasing at an annual rate of 7.3%.

It will take more than Trump to bring the Russian economy in from the cold
Hampered by economic sanctions since its 2014 annexation of Crimea, the Russian government is increasingly hopeful of a normalisation of relations with the West in the aftermath of a Trump victory. However, the country faces much wider problems, including unfavourable demographics, a widening budget deficit, a lack of impetus for meaningful structural reform, if not any more, weak commodities markets. While the Russia economy will probably return to growth early next year, sustained, vigorous growth is likely to remain elusive.

Chinese Household Debt

US Consumer Sentiment