Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe. Davos endorses Trump economic tax policy – World growth forecasts upgraded – 2017 China growth exceeds forecasts – Australia continues strong employment growth We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.
The Big Picture
Each year, the powerful and wealthy descend on Davos for the World Economic Forum. Trump attended – against expectations by some – and some key figures backed his new tax policy.The Big Picture
The IMF announced its growth forecasts for 2018 and 2019 had both been upgraded from 3.7% to 3.9% and the IMF Director, Christine Lagarde, attributed this upgrade to Trump’s tax reforms.
Jamie Dimon, the influential leader of JP Morgan, stated that 4% growth for 2018 in the United States (US) was quite possible – again based on Trump’s tax break. Apple had already announced repatriating $US245 bn in cash that will attract a US tax take of $US38 bn.
Some scoffed at Trump’s talk of 4% growth in the US following his election. It seems their mirth was misplaced. Trump is not generally popular but he is effective.
And he’s just started work on his one and a half trillion dollar infrastructure policy.
The latest economic growth figure for quarter four 2017 just missed expectations at 2.6%, but that quarter finished before the tax cuts were enacted.
On top of tax, North and South Korea are not only marching together but fielding a joint hockey team in the upcoming Winter Olympics. Did Trump do that? It’s hard to say but his push for sanctions on North Korea seem to be having some impact – as did his missile barrage on ISIS earlier last year. And the US unemployment rate is at a 17-year low.
The world economies are interlinked. China just posted a growth figure for 2017 ahead of forecasts and even government expectations. As far as investors are concerned, the only take-away is that things are bubbling under quite nicely.