The perspectives for 2017 are disturbed by rising political risks

8th December 2016

Hugues Chevalier, Economist

While we had retained the scenario of a progressive recovery of the activity and growth in Europe, the US and in the Emerging Market for 2017, political risks which emerged 2016 have changed these hypotheses. Indeed, after Brexit in the United Kingdom, the election of the republican candidate at the US presidential election on November 8th, and the resignation of the Italian prime minister on December 4th, political risks might derail worldwide growth in 2017. Basis for the concern are the announcement of the president elect, especially comments about increased import taxes. Their increase could strongly affect Asia and Mexico, who already suffer under the context of stagnation of worldwide trade. Closer to us, in Europe, the uncertainty remains complete concerning Brexit, both in terms of deadline as well as whether free trade agreements will remain or not. In such an uncertain environment companies will, at best, move their investments to later. And more general, in Europe, the rise of populistic and anti-liberal political forces could increase the risks to the economic growth, which is still recovering from the crisis 2008.