The increase in the economic growth of the U.S. causes other country's economies to fall. The increase in dollar value and the interest rates added with the U.S. - China trade war negatively affects other country's economies.
The uncertainty of the global economy is evident in the financial markets. NatWest Markets registered the drop in Australian dollar and copper by 4.5 percent which is highly comparative to its 7 percent gain of the Standard & Poor's 500 Index. Jim McCormick, head of cross-asset strategy at NatWest said that the gap in performance of the countries globally captures the nature of growth imbalance this year.
The Federal Reserve's two interest-rate hikes of 2018 increased the dollar's trade weight at about 6 percent that adds international borrowers extra burden in repaying their loans. According to Mark Nash, head of fixed income at Old Mutual Global Investors, the Federal Reserve raising rates could be retained but it might stir up the U.S. economy.
Nash on a statement on the Bloomberg Television stated that the continuous fluctuation in other markets will affect the U.S. economy and how the Federal Reserve manages the country's monetary policy. He added that for now Jerome Powell, Chairman of the Federal Reserve, can't be criticised of his actions but the implications of his work will haunt him back.
The slow movement in the economy of countries outside the U.S is evident. According to Economists at JPMorgan Chase &Co., although the U.S. increased the overall global growth, breaking its long-term trend, there is a decrease from 80 percent to 60 percent to the share of countries that performed well.
The fast-moving economy of China slowed down as the country adapts to they're new economic and trade policies countering the effects of the trade dispute with the U.S. There has been a slowdown in the Economic Growth of Japan.
Europe also suffers economic growth setbacks this year due to export concerns. Germany's economy also declined, the first in two years. Italy fears the effect of investors clashes over its fiscal plan.
According to Tom Orlik, Chief economist at Bloomberg Economics, excluding China, the emerging and developing economies contributed about 24.6 percent of the global output in 2017, a visible decrease in output when compared to the 26.7 percent in 2013. The Kuehne + Nagel Group calculated that market in Brazil, South Korea, Taiwan, and India is decreasing at about 5 percent annually. Robert Subbaraman, an economist at Nomura Holding based in Singapore said that in economic setbacks, it is no longer a question of "if" but it is more of "how much" Asian growth will decline.
