2016 is over, 2016 became a year filled with surprises in terms of politics and economy. 2016 has been ongoing referendum in the UK and ended up surprising, because the British exit from the EU. This result is known by the Brexit or British Exit, beat Bremain (British Remain) is desired Britain remains a member of the European Union. Another surprise was the election of Donald Trump as President of the United States. Trump was formerly known as a controversial figure.
From the economic side, the world was shocked by the deterioration of the British currency, the pound, following a Brexit. The pound had fallen to the lowest level in 31 years against the US dollar. American capital markets are also a record number of times. Followed by China which continues to devalue their currencies.
When in 2016 the progress is so dramatic and full of surprises, the fair when we all wondered, how in 2017? What color will the world economy? The following surprising predictions in 2017, as quoted by Business Insider:
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The euro will strengthen
The position of the EU currency, the euro, is now in the lowest level against the US dollar in the last 13 years. EUR / USD up on Tuesday (27/12) in the position of 1.0437. The euro weakened in the face of the US dollar this year can not be separated from Brexit.
On the other hand, in 2017 the US economy is getting hot will prompt the Federal Reserve to tighten the economy, and this will slightly affect the prestige of the US dollar. The euro has a chance to bounce back in the face of the greenback.
World oil prices rise
World oil prices show the movement attractive in 2.5 years. After the price dropped to US $ 100 per barrel, to US $ 25 per barrel during 2015 to 2016, world oil prices have recently climbed back into the range of US $ 50 per barrel. Supply-demand imbalances have been corrected by the fall rig, shale gas production is declining and the absence of new investments in the energy sector.
World oil demand in 2017 will be re-crawl up, especially from the area of developing countries (emerging markets). On the supply side, the decision of the oil-exporting countries (OPEC) to reduce production, will keep oil prices strong.
Fed interest will rise
Uncle Sam’s economy will continue to show improvement next year. As a result, the US central bank is the Federal Reserve will raise the fed funds even up to 6 times a year in the future.
Since the US economy slumped as the financial crisis of 2008, so far only two times the Fed raise rates. Recently Reviewed December 14, 2016 by 25 bps to 0.5% -0.75%.
Inflation American economy will be above 2% year-on-year, next year. Fed interest would not want to go up in order to avoid negative interest rate. Predicted first increase occurred in March and June, and the next hike to take place at the meetings of the Fed’s next.
Bond markets in developing countries achieve the best performance
The economic fundamentals of developing countries had begun to improve after the episode tapering American policy. A stronger US economy to bring a positive impact for the emerging markets. International trade, export and import of stimulating the economy, considering America is one of the largest markets of developing countries.