Economy - - Dec 08,2016
Economist predicts that Chinese GDP can surge significantly next year, whereas, the rising U.S. interest rates and higher dollar value can cause a jump in the U.S. 10-year yield by 3%.
Such optimistic predictions are postulated by Steen Jakobsen at Saxo Bank. A total of ten possibilities are stated by the Danish bank to offer a slight overview of the world economy in the upcoming year.
Jakobsen focused on China and announced that the country could produce an enormous monetary as well as fiscal stimulus which will offer a clear road for capital markets. He also mentioned that, China will successfully transform into a consumption-led economy, which was indeed desired since many years. At the moment, "euphoria" would turn up to be the prime cause in allowing the Shanghai composite index rise up to 5,000 points; almost 55 percent superior to its level counted on Wednesday. On the other hand, Chinese GDP growth is sighted to reach 8%.
These evaluations are quite interesting by the chief economist at Saxo Bank. He offered a mind-boggling fact involving a comparison between Chinese and European consumers. "The total spending by the Chinese consumer in the next fifteen years will be more than the total size of spending in Europe," as claimed by Jakobsen.
The list also indicates Brexit to be replaced by ‘Bremain’, as soaring jitters of worldwide populism is pushing the European Union (EU) to portray a cooperative attitude towards the U.K. Among the other ‘outrageous’ predictions, Jakobsen outlined the economic state of the U.S. after the incoming of the new President-elect Donald Trump. He pointed out that, the introduction of a new fiscal policy alongside increasing U.S. interest rates merged with a greater U.S dollar would cause a 3% plunge in the 10-year U.S yields. This would surely lead to a situation of market panic that will involve the Federal Reserve to respond by correcting the 10-year government yield to 1.5 percent with the introduction of Quantitative Easing (QE).
"His policy so far … has nothing to do with progress, has nothing to do with what needs to be done in the U.S.," Jakobsen warned keeping Trump at focus. He also added that, his words are only from an economist’s point of view.