Since Donald Trump took office as the President of the United States of America in 2017, his administration has been using trade restrictions and tariffs as the preferred way to conduct diplomatic relationships with other nations, notably China, Mexico, Canada, the European Union, South Korea, Japan and now India.
Never have I seen this being carried our by the previous presidents of USA. World trade is no longer the same as before. This trade restriction is affecting the global economy. Singapore is affected negatively starting this year since Singapore relies on export revenue to prop up our Gross Domestic Product (GDP) numbers among other GDP drivers.
With slowdown in economic growth, businesses that rely on global movement of goods and services are affected too, leading to poor business results and poor share prices. This is the headwind businesses are facing. Advance estimates for second-quarter’s GDP of Singapore was just 0.1% growth year-on-year, continuing the decline from first quarter’s growth number.
The stock markets of US continue to rise and are out-of-sync with the rest of the global stock markets. This is like blowing air into a fully stretched balloon continuously and as in all balloons at this stage, they will ultimately burst (unless there is a release of air gradually).
I am wary and cautious even as the Federal Reserve is preparing to cut benchmark interest rate in July to boost economic growth of the US. The US is not an isolated country that is immune from slowdowns in other economies. GDP number drives the stock markets besides cheaper borrowing rates. Watch out for the economic growth of the US in the coming days and months.
Copyright © 2019, limkimtong for Living Investment
The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.