Global Economy

With all the trade and tariff talks going on, what players in the global economy will get hurt the most in relative terms? Most people would argue that China and the U.S., being the largest economies, is the answer to that question. The countries that get hurt the most are not the big players, but rather a large collection of smaller players. They are mostly located in the middle part of the supply chain. Economies have the ability to make raw materials and ship them, make component parts in the middle process, or value add on the back end. Even though China and the U.S. are the largest players in the trade war, they are also the most insulated because of their balanced offensive attack. They can do raw material production, component production, and value add production all very well.

Components

On the raw material and commodities side you have countries like Australia and New Zealand. New Zealand has a lot of beef exports which are a raw material. Those countries could manage, in general, in a trade war. Countries that fall in the middle part, where most of the economies are based on making components and buying raw materials but don’t really do the final value adding, are the ones that get hurt. South Korea is an example of this component driven economy. The one that would be hurt the worse might be Taiwan. They have built almost an entire economy around a component manufacturer. Singapore, Ireland and Hungary all do component work as well. Hungary is considered a component economy because they do a lot of component work in the automotive industry.

 

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here

 

Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

No strategy can ensure success or protect against a loss.
Stock investing involves risk including potential loss of principal.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.

#292 Domestic Strengths vs. International Alarms #290 Undercurrents in the Market