Good Export Growth Will Be Restrained By The Appreciation Of The Dollar Essay Example
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An economic summary of The United States Growth in the US has been energetic, averaging 3.9% annualized in the 2014. Consumption has benefited from low unemployment rate(below 5.5%) and income growth, and lower oil prices. As companies continue adding 200,000 - 300,000 working places a month, consumers are feeling more secure about their buying ability. However, the social survey shows that 70% of Americans still believe the U.S. economy is damaged, while 84% thinks that the economy has not improved at all since the crisis ended 5 years ago.
In 2015 the we will see the divergent monetary policy as a trend, especially if the Fed will raise rates around summer, much earlier than the markets are currently discounting (Economic Outlook, 2015). A few years of fiscal austerity reduced the size of the federal budget deficit (by approximately 50% for the last 4 years) and improved public accounts and local government level. Nevertheless, the long-term sustainability of the entitlement programmes is being questioned repeatedly and their reforms will remain on the agenda, although the sharp political divisions will most likely prevent reaching any consensus in the near term.
In fact, not all sectors of the economy are feeling well:
a pullback in drilling due to the situation with the oil prices on the market;
Meanwhile, The U.S. energy independence is now strong as never, as February petroleum imports totaled $16.3 billion, the lowest since September 2004. An economic summary of European Union
The EU and the US are the world's major global traders and investors. In fact, the EU is the largest economy in the world, representing 25.1% of world GDP and 17.0% of world trade (Economic Outlook, 2015). In recent months, financial markets have mainly been driven by increasing divergences between the monetary policies of the major economies.
In the EU, where fiscal accounts has been damaged by the loss of tax income during the economic downturn and by bailouts of the banking system, fiscal consolidation has been progressing slowly, with only minor improvements. In large economies, such as France, Germany and Britain, the Government mostly relied on tax increases. After a long deep recession, especially in southern Europe, the eurozone economy is finally showing signs of recovery this year.
An economic summary of Russian Federation
Russia is a major player in the international economy: it has the world's ninth-largest economy, a population of more than 140 million, and is a major producer and exporter of natural gas and oil. There is relatively little overall direct trade and investment with the United States, however, Russia is a major partner in a number of key spheres with EU, including economy, energy, internal and external aspects of security. The annual turnover between Russia and the EU member states currently exceeds 200bn euros (Aris, 2014)
A forecast on The United States’ economy in 2015
The United States economy growth was rather slow for a few years after the crisys in 2008. GDP increased at 2.1% each year. In 2015, the GDP growth is expected to accelerate to at least 3.2%, or even more, as businesses and consumers becomes more confident in their future. With this information, 2015 should be the best year for the American economy for the last 10 years.
During the 2014, companies finnaly began to think more about spendings than savings. For sure, as the political and finantial climate has cooled, investors and companies focused more on their future and have taken more aggressive steps to increase income with expansion in spite of cost-cutting.
With these new strategies companies have:
Increasing in investment: for the last year corporate investment in hardwear and basic equipment has increased 8.6%, that is twice more than in previour 4 years;
Boosted inventories: over the previous year, corporate inventories reached at an annual rate of $75.3 billion;
Boosted hiring: companies continue adding 200,000 - 300,000 working places a month. the biggest increase since 1999.
Overall, global growth is expected to rise in 2015 to 3%, and to be sustained at 3.2%-3.3% in 2016-17. Due to the appreciation of the dollar U.S. Treasuries today look like good value compared with low yielding Japanese and European bonds in depreciating currencies(Economic Outlook, 2015).
Bernard Baumohl, chief global economist of the Economic Outlook Group, said he is even more optimistic. “The next two years could be the best two we have seen in at least a decade,” he said. “There is clearly a lot of evidence the economy is gaining a lot of momentum.”
Of course, any forecast has risks associated with it. Economists believe that the biggest potential downside risks would be: a worsening global environment, an unexpectedly sharp increase in interest rates or rising financial market volatility.
Trade relation of The U.S. and developing countries in Asia
At the end of 2012, President Obama and ten Leaders of ASEAN announced an effort to extend ASEAN-United States trade and investment relationship by launching Expanded Economic Engagement initiative. For sure The US government is concerned about a rising China and long-term tradind relations with the Southeast Asian countries is a correct way in order to balance China’s power. ASEAN countries include Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam (Devonshire-Ellis, 2010).
Why Indochina? American agricultural exports to Southeast Asia have been growing rapidly, thanks to strong economic growth and increasing demand for high-value products in the region. With this growth expected to continue, the region holds significant opportunities for U.S. exporters.
Devonshire-Ellis, C. (2010). Cambodia, Laos and Vietnam - Indochina and China Today - China Briefing News. [online] China Briefing News. Available at: http://www.china-briefing.com/news/2010/11/19/cambodia-laos-and-vietnam-indochina-and-china-today.html [Accessed 23 Apr. 2015].
Aris, B., 2014. Impact of Sanctions on Russia: An Assessment, London: European Leadership
Forecast in Detail. (2013). Economic Outlook, 37(1), pp.49-65.
Wingender, A. (2015). Skill complementarity and the dual economy. European Economic Review, 74, pp.269-285
British Broadcasting Corporation. Russia Shows First Sign of Recession as GDP Contracts. British Broadcasting Corporation. December 29, 2014. Web. [Accessed 23 Apr. 2015].
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