Initial Perspectives on 2017 and so long to 2016!
It’s that time of year where we start to set our eyes on what the next 12 months has in store for us. Along with the continued slow recovery from the financial crisis, 2016 was a year fraught with political surprises and market volatility. With Italy’s recent ‘no’ vote on political reforms, the forthcoming referendums and elections in France and Germany and more than $10 tn in public debt outstanding, the risk of further heightened Eurozone instability is cause for elevated concern. It is safe to say that 2017 will be yet another wild geopolitical ride. Emerging market economies continue to struggle with the mix of low commodity prices, high debt levels, the stronger US dollar (which causes stress on those with US$ denominated debt), and threats of trade disruption. Furthermore, analysts around the globe are beginning to report on the risk of stagflation, were growth stagnates but debt monetization drives inflation higher, which may present close to a worst case scenario for financial institutions. So with all of that, 2017 looks to be another challenging year.