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Forces Driving World’s Hottest Economies
With global recession calls swirling around plenty of trading desks, the global economy does feature hot pockets of activity in Europe, Latin America, Asia and Africa. Those economies are faced with disruptors ranging from climate change to automation and digitization and from protectionism to populism. How each economy approaches disruptors will have a significant impact on how their economies will perform. Then there are more traditional economic drivers such as labor force, education, investment and productivity.
China Continues to Disrupt and Drive
The Chinese economy has enjoyed exceptional growth over the past four decades as it modernized its economy, invested in infrastructure and elevated a large swatch of its population from poor farmers to the middle class. Domestic demand is cushioning negative impacts of the trade war the US started in an attempt to halt the advance of China. The Chinese government has become a global leader in frontier technology such as artificial intelligence, 5G and surveillance as well as defense technology. It has also taken a leadership role in biotechnology.
China does face challenges from climate change which could result in short-term issues such as water scarcity. It is also heavily dependent on commodity imports as it doesn’t have sufficient domestic supply to drive its global expansion. This is one reason why it embarked on its Belt-and-Road Initiative which is heavily criticized by the West. It has created close relationships with frontier economies, mostly across Asia and Africa and secured future supply to fuel the growth of China.
The EU is Home to One Hot Economy
Poland has been the poster child for growth inside the EU which is an anomaly as the trading bloc is doing everything but growing. Now the economy is faced with a labor shortage which is threatening the expansion of the economy. The low workforce is forcing employers to rely on migrant workers, but Poland’s government is against a large foreign workforce. It has started to offer big monetary incentives to encourage women to have more children, Poland has one of the lowest birth rates in Europe. Some families may even be exempt from income taxes. An exodus of workers has further strained the ageing workforce.
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Climate Change Disrupts Economies
Climate change is starting to have a growing impact on economies across the planet. Zambia is a prime example of the catastrophic effects of climate change as the worst drought in over 40 years has not only resulted in severe crop failures, but also cut output at the hydro power dams along the Zambezi river which generate roughly 80% of Zambia’s electricity. Zimbabwe shares the same power output and struggles as Zambia.
While drought is destroying crops in one part of the country, floods are doing the same in another part of it. This is not only resulting in electricity shortages, but also in food shortages and the ripple effects trough the economy are noticeable. Extreme weather conditions are not only plaguing African economies, but are evident throughout. Typhoons in the Pacific Ocean, hurricanes in the Atlantic Ocean and Cyclones in the Indian Ocean are more frequent, extreme and damaging than before.
Wild fires rage in the Amazon as well as Western US, water levels are rising and freshwater sources are drying up. All those factors will continue to have a crippling effect on the global economy and countries needs to act fast in order to counter extreme weather events and minimize them going forward. A collective effort is required and soon we will see economic opportunities arise in economies which learn to cope with this new disruptor faster than others.
3 High-Profit Trades for Your PaxForex Trading Account
As China is stabilizing, the Australian Dollar is receiving a boost. At the same time the US economy is weakening which is providing a bullish driver for the AUDUSD. Price action is currently trapped in an area above its secondary ascending support level and its secondary descending resistance level. A breakout is anticipated to take this currency above its horizontal resistance level from where it can further advance into its horizontal resistance area. The CCI retreated from extreme overbought conditions, but remained in bullish territory and more upside is favored. Open your PaxForex Trading Account now and join one of the fastest growing trading communities in the forex market.
Poland may be faced with a labor shortage, but it still outperform the whole of the EU and is expected to strengthen further against the Eurozone. The EURPLN has accelerated to the downside over the past five trading weeks after being rejected by its horizontal resistance area. Price action has now completed a breakdown below its horizontal support level and is expected to extend its sell-off through its primary ascending support level into its horizontal support area. The CCI has moved into extreme oversold territory, but remains off of its low. Follow the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Brexit limbo remains a headwind for the British Pound, but this is a short-term event which could be resolved in a matter of weeks while the South African economy is facing fundamental challenges. The GBPZAR already completed a breakout above its primary descending resistance level and is now favored to do the same to its horizontal resistance level. This can extend its rally until it will challenge its horizontal resistance area over the long-term. The CCI is approaching extreme overbought conditions with plenty of upside left. Subscribe to the PaxForex Daily Forex Technical Analysis and grow your balance trade-by-trade.
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