‘When you’re in the news business, you always expect the unexpected!’
This is certainly the new political conviction when it comes to the encounter that nations will soon face, succeeding the introduction in the new economic policies and with Donald Trump in the big picture.
Ruchir Sharma, chief global strategist and head of the emerging markets equity team at Morgan Stanley, also the author of the International bestseller ‘The Rise And Fall Of Nations’, shares his opinions on how these radical steps taken by Donald Trump could create an economic chaos all around the globe – and how 2017 will look like, especially for India.
Here are his trend predictions for the upcoming year.
- The markets have taken Trump’s emergence at the office with certainty, reserving faith that the Trump government will augment the economic growth by truncating red-tapism and taxation. By offering to downsize the corporate tax to nearly half (from existing 35% to 15%), there emerges influential pressure on the countries, such as India and Germany to lessen their taxes to reciprocate the same. It is hoped that India will be proactive, and not reactive, to this, and make the Indian tax structure more investor-friendly.
- The 2008 crisis indicating the saturation of globalization, now witnesses the declining trend giving way to nations with comparatively larger domestic consumer markets such as for Peru, Indonesia and India; and slowing down the growth of export centric nations like South Korea. To a large extent, the focus is now towards ‘nationalism’, which is slowly, if not steadily, replacing ‘globalization’.
- In addition to the dwindling globalization, the population growth has also sharply slowed down in most developing countries and therefore consequently reducing the number of nations growing at a steady rate greater than 7% from 50 before 2007 to rarely 6 now. With this expeditious declining global growth trend, it also appears paradoxical for India to have a growth of more than 8-9% at most.
- The repercussions succeeding the Global Financial Crisis have led to a revolt against the incumbents. These functionaries attained only 40% of the elections of the former 90% in 2009 among the largest democracies. Hence in redress these leaders responded in an effort to defend themselves trying radical economic experiments such as the major demonetization scheme in India.
- There is a declining faith in democracy, chiefly among the younger generation holding an inclination towards the authoritarian strongmen. This augurs unsatisfactory for the economic future since the democratic regimes tend to show a more steady growth rate pattern comparatively.
- Expect the unexpected; Europe having faced two consecutive recessions in the recent last decade is less likely than more to face another, asserts Ruchir Sharma. Also the decreasing debts in the European banks will strengthen the scope for new lending and growth within the economy.
- Latterly, China has been incessantly forcing out debt with most going to waste mainly in the concealed commodities such as of garlic and glass. Although none view the China’s debt as a global risk, it is a critical constituent to be eyed upon.
- The last one – believe it or not, people are making the switch from sports to news. The focus is clearly being shifted from watching sports, to now watching the news!
How much of these predictions hold true, well, only time can tell!
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