Despite concerns about the impact of Donald Trump’s presidency, a group of prominent economists insists 2017 might be better for Australia than we think.
There might be gloomy forecasts from the IMF and fears about the protectionist rhetoric coming out of the United States, but global professional services giant Deloitte suggests it’s not all doom.
In the first of its Voice of Asia series of papers, released on Monday, Deloitte Acess Economics partner Chris Richardson explains the global economy is finally normalising after a decade of shocks, from the global financial crisis to those in the Middle East and Europe.
World trade volumes also appear to be picking up and India and China are increasingly being powered by consumer booms, led by a technology savvy generation.
Such booms provide an additional line of defence for the major Asian economies if global growth isn’t as good as expected.
“Yes there are risks, with those for 2017 revolving around the potentially volatile mix of President-elect Trump, trade and tariffs, but there are always risks and too many forecasters are too negative on Australia’s 2017 outlook,” Mr Richardson said.
One of the largest risks remains the anticipated depreciation of the Chinese yuan.
Deloitte’s China Economist Sitao Xu warns if the Chinese government is too aggressive in managing the depreciation, other Asian currencies might fall and it could tempt Mr Trump to follow through on his protectionist rhetoric.
“Any impact on China from yuan devaluation or other policy changes could have a significant knock-on effect on other Asian economies,” he said.
“However, in the long run, most economies in Asia will benefit if China succeeds in rebalancing its economy.”