Impact of Trade Wars

Every drop in oil pricing has a consequence

Both the IMF and the World Bank agree that China is the world’s largest exporter and economy based on purchasing power parity (PPP). This is crucial to understanding the unfair advantage that China now has over smaller economies by devaluing the yuan. Indonesia, Vietnam, Thailand, and Bangladesh—whose lower-cost economies erode Chinese competitiveness—could lose revenue as cheaper manufacturing swings back to China. The devaluation would also significantly impact on India as a direct competitor to China. China is also the world’s largest energy consumer, playing a decisive role in crude oil pricing. If, as seems likely, China forces a move towards payments for oil in yuan rather than U.S. dollars, the consequences for America could be severe. Every US$1 drop in oil prices results in a $1 billion decline in India’s oil import bill, which stood at $139 billion in the fiscal year 2015. The drop in the oil price caused by the Chinese yuan creates a widening gap between competitors, which makes it an unhealthy playbook for global economics. Australian businesses need to broaden their horizons and spread their risk. Talk to Ryan hashtagbusiness hashtagtradewars hashtagvariables hashtagtippingpoint hashtagglobaldisruption hashtagasianmarkets hashtagstrategy hashtagimpact hashtagleaders hashtagcommodities hashtageconomy




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