The biggest factors that might influence finance in 2017

The financial world is complicated. Even those who spend years learning about how it operates won’t claim to be perfect predictors of what will influence the markets. All anyone can do is prepare. That doesn’t stop proper analysis, however. To that end, it is a good idea to think about the kinds of things already occurring that could influence the financial world in the years to come.

Politics is global

The nomination of Donald Trump, a TV-personality and professional inheritor of other people’s wealth, to the President of America shocked large parts of the world. Despite losing what Americans call the “popular vote”, Trump went on to take the office. This has had enormous consequences for the global financial market, both good and bad. As the Guardian points out:

“Trump could be good for geopolitical stability, at least in the short term. Trump’s preference for transactional realpolitik over Obama’s liberal interventionism should stabilise relations with Russia and China as the world is divided into spheres of influence. Trump could give Russia freer rein in Ukraine and Syria in exchange for restraint in central Europe and the Baltics. China’s inevitable dominance in Asia could be accepted, provided it avoids outright wars with Japan, Taiwan, and other countries whose security is, in theory, guaranteed by treaties with the US. The Middle East is bound to remain a cauldron of geopolitical unrest; but, even here, Trump’s preference for local strongmen over ‘democracy promotion’ could restore a degree of stability (at the cost of human rights).”

Of course, as with so much of human action, there’s bad news, too. Trump is a leader who has  a zero-sum game approach to trade. With incredibly protectionist campaign rhetoric, he promised severe curbing on international trade. Naturally, as the saying goes, when America sneezes the whole world catches a cold. To that end, any kind of financial moves from the new administration will have lasting consequences.

There’s also the shocking reaction to United Kingdom’s decision to leave the European Union. As the Financial Times reports: “According to officials at the Bank of England and the Treasury, the big concern is that the uncertainty of having no functioning government, no effective opposition and no plan for Brexit means households and companies will put spending decisions on hold, prompting a steep downturn that threatens to become self-reinforcing. They also worry about Britain’s current account deficit of 7 per cent of national income which requires the nation to rely on external finance to prevent sterling from sinking.”

This tells us that the future focus for global finance initiatives must look globally. No longer can you look at local markets. Everything is affected by everything else, some more than others. Superpowers like America and Britain are obviously casting a wider net than, say, African countries – but that doesn’t mean there aren’t complications that will arise regardless.

New South African tax laws

Recently, President Jacob Zuma signed new bills into law. These are all part of ongoing discussions regarding how people manage their finances. As Business Tech reports, one of these new laws is about unemployment: The Unemployment Insurance Amendment Act.

“The main purpose of the legislation is to amend the Unemployment Insurance Act so as to provide for the extension of the unemployment insurance benefits to learners who are undergoing learnership training and civil servants and also, among other things, to adjust the accrual rate of contributor’s entitlement to unemployment insurance benefits and to provide for the process of application for maternity benefits.”

Other legislation tackles finance in various forms, all of them therefore will have an effect on everything from insurance to corporate finance. It is wise then to speak to financial experts to figure out precisely what this means for you and your business. Even if you’re not a business owner, you will be affected by what businesses do and what the law says they’re now allowed to do.

Purchases

Cars are some of the most expensive items anyone owns. And recently the sales have not looked good for the industry. As Wheels24 notes:

“Naamsa says its 2017 projections for South Africa reflect an expected improvement in GDP growth to around 1.5% (from 0.4% in 2016). Local political tensions are likely to reduce business confidence and the expected increase in taxes in this years’ budget will erode real purchasing power. Internationally, volatile and uncertain conditions are likely to prevail during 2017.”

In America, the situation isn’t much better. Wallet Hub reports: “it is unlikely that the U.S. auto industry’s boom can continue much beyond 2017. So we can expect sales volume to begin regression toward the historical mean of just over 15 million vehicles sold per year.”