US and China hinted at progress towards resolving the spiraling trade dispute
US and China
The currency weakened by 7.4% on Friday morning and so far, this year is down more than 35% against the US dollar.
The past week saw another sharp fall in the Turkish lira. The currency weakened by 7.4% on Friday morning and so far, this year is down more than 35% against the US dollar. This comes amidst rising pressures from Turkey’s political spat with the US. In retaliation to the Trump administration’s announcement of doubling tariffs on its steel and aluminium imports, Turkey on Wednesday announced a steep tariff hike on American products, including cars, alcohol and tobacco. The US subsequently threatened to impose more economic sanctions on Turkey following its refusal to release American pastor Andrew Brunson held in Turkey for nearly two years over alleged links to outlawed political groups.
The crisis in Turkey spilled over to the rest of the emerging markets, and the South African rand lost another 4.12% in value. The local equity markets closed 1.73% lower.
Following a silence of over two months, the US and China announced they will be meeting in late August for lower-level trade talks, which hinted at progress towards resolving the spiralling trade dispute. This could be good news for the global economy.
US household debt rose 3.5% in the second quarter of 2018 from a year earlier, reaching a record $13.2 trillion. An advance in mortgage borrowing, which rose 3.5%, to $9 trillion, drove the rise. Debt has been trending higher since the first quarter of 2013 and has increased for 16 consecutive quarters.
UK unemployment fell by 65,000 to 1.36 million in the second quarter of 2018, which was its lowest level since 1975. The unemployment rate declined to 4% from 4.2%, which was better than expected.
Eurozone GDP was revised to 0.4%, from 0.3%, for the second quarter of 2018. The accelerated growth may be attributed to strong economic growth in Germany, which increased by 0.5%.
Although global growth would seem to be on track, unfortunately the same cannot be said for South Africa. According to the median prediction by 22 respondents in a Bloomberg survey, average gross domestic product will be 1.4% this year, which is down from 1.5% previously. GDP growth is the only solution to the country’s high unemployment rate, yet South Africa can only achieve this in an environment of political stability and clear policy guidelines.
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