Looking at the factors that have conditioned the world economy in this year we could say that we are in a moment of difficulty and uncertainty. In fact, with the trade war between the United States and China, tensions between Italy and the European Union, Brexit, American sanctions against Iran, debt growth in emerging countries and in developing countries and the collapse of the price of oil, the headlines of the newspapers and the televisions have led to thinking that they are experiencing a period of insecurity.
However, the data on the real trend of the global economy tell a different story. According to the preliminary findings of the International Monetary Fund, the global economy in 2018 grew by 3.7 percent. As regards the data of the global economy of 2019, released on January 21st, with the new World Outlook of the IMF it says that the global economy should grow by 3.5%, while in 2020 it should grow by 3.6%. Therefore, flat growth but still growth.
This growth, in my opinion, has a good pace, considering all the factors mentioned above and the many differences and peculiarities between areas and between countries. The contrast between what the newspapers say and what the state of the global economy is more evident and marked if we consider the recent growth of the United States, one of the first world power. In fact, it has experienced the best year for a decade now in terms of GDP growth and, in general, of the main economic indicators: employment, unemployment, investor and consumer confidence, industrial production. In 2018, American growth was favored by the tax reform which reduced corporate taxes from 35% to 21% and from the increase in public spending which pushed demand (while also raising the federal deficit to a record level). The Fed continued to raise the cost of money to avoid excessive overheating of the economy and inflationary risks. But US government bond yields soon surpassed those of long-term bonds. We can see the chart below as one of the examples of US growth. The US economy should continue to grow, but at a slower pace. It will grow less but still at higher rates than the other major world economies. If the positive trend of the US economy continues without a recession according to estimates by the National Bureau of Economic Research, another record for the United States will be exceeded: that of the longest period of economic expansion from 1991-2001, the longest ever for the US economy since 1857. What happens in the United States, however, should not be considered as a guide for the whole world. In fact, for example, Brexit will certainly have an impact on the UK economy, which will decrease according to all forecasts, and Europe’s economy will consequently decrease. China will continue to grow, but less than usual under the turbulence of bilateral relations with the United States and with the mine triggered by local and banking debt: in 2019 the growth of GDP according to Bloomberg estimates will be 6.4%. India remains the growth champion in Asia. The idea that I made is that today’s economy is neither in expansion nor in recession. Personally, I consider today’s economy to be flat and stagnant. Hence, to ensure my profits and to limit as much as possible (and make up for) any losses, I will diversify my investments. A portfolio of investments in various sectors allows greater security. Probably the gains will be limited, but this choice allows you to have a stable and above all continuous income. Any downturns in the market will not detract from the gain, because there will be another area to compensate. A suggestion I can give is to get information carefully and not to believe long-term forecasts passed off as certainties. Making accurate forecasts is incredibly difficult, and the performance of many markets is uncertain. In fact, the market also exposes those who are not familiar with it to great risks: but how can we distinguish good from fraudulent actions, the right information from the wrong ones? First of all, it is good to get information on the information bodies and verify the reliability of the information sources. I personally look at the official data of central banks and major stock exchanges. Here are explained which are the most probable assets that grow, and which ones decrease safely and reliably. Then, I suggest that we keep ourselves informed not only about economic but also political and social matters. In fact, as we have seen, the world economy is often influenced by significant political events and important political choices. In just forty years China has emerged as the world’s second largest economy, a driving force for global economic growth, an emblematic case of success in terms of human and infrastructural development, and a credible actor in the governance of the international order. The country’s government is led by Xi Jinping, who aims to achieve a “moderately prosperous society” by 2020 and to restore full authority to China in the international system. The sudden ascent of China at the top of the most salient global rankings, led it to be the first country in terms of foreign trade volumes, manufacturing production, foreign exchange reserves, energy consumption and greenhouse gas emissions. Therefore, today, the Chinese economy is one of the most important economies in the world and its continuous expansion contributes decisively to the development of the world economy. Therefore, due to its great importance, it is also important to consider the implications of the distortions of Chinese financial markets such as capital controls for investing. Nowadays capital controls are one of the main topics of debates. Capital control represents any measure (such as taxes, tariffs, legislation, volume restrictions and market-based forces) adopted by a government, a central bank or other regulatory bodies to limit the flow of foreign capital into and out of the economy national. Capital controls are established to regulate financial flows from capital markets in and out of a country’s capital account. These controls can be at the economy level or specific to a sector or sector. They can limit the ability of nationals to acquire foreign assets, called capital outflow controls, or the ability of foreigners to purchase domestic assets, known as capital inflow checks. Capital controls can be considered both a limit to economic progress and efficiency, and a necessary measure to increase the security of the economy. We can consider the war of duties between China and the United States as an example of capital control. In June 2018, the American president, Donald Trump, approved duties on a long list of Beijing products, worth about $ 50 billion. This decision was taken with his closest White House advisers and with some of the top national security officials, the Treasury and the Department of Commerce. The list originally compiled by the experts concerned about 1,300 product categories “made in China”, starting from the technological ones. Immediate came the counter-attack of China that decided to impose an additional tariff on US goods worth about 50 billion dollars. Exactly the same impact of the measures launched by Trump. The Chinese Ministry of Commerce has called the US one a “commercial bullying” move that has given rise to the largest trade war in economic history. Indeed, the duties that Washington and Beijing have imposed on themselves could be a serious threat to the recovery global economy. In fact, trade wars, even if fought mainly by only two countries, shake world economic stability. Especially for the European countries that, after the 2008 crisis, have invested heavily in the export development of their companies. Export was one of the best performers for economic recovery.Due to the interdependent nature of the world trade system, it is the entire global trade that is severely compromised whenever a wall rises in the trade channels. And with the widespread mistrust of duties, European companies born or converted with a strong vocation to export, suffer a brake that aims stability. Even the stock exchanges are in strong decline: there is distrust on the part of investors. If we look at the reaction that the news of Chinese duties has had on US exchanges, we can see that the session on Wall Street began under the banner of the “sell-off” on the fears associated with an escalation of trade tensions between the United States and China. The Nasdaq high-tech index, affected in particular by the fall of Apple (-5.80%), fell 2.98% to 7,681.30 points, shortly after having suffered a drop of over 3%, while the Dow Jones Industrial is in red by 2.21% at 25,368.92 points and the S & P500 by 2.26% at 2,826.15 points. Also, on European markets, negative sign: the worst is Frankfurt (-1.6%), followed by Paris and Milan (-1.3%), Madrid (-0.8%) and London (-0.6%). US-China tensions in duties weighed on Pirelli automakers (-2.3%), which will spread the accounts tomorrow, FCA (-1.7%), Cnh (-1.4%), as well as on the other European lists: Daimler (-3.9%), Peugeot (-3.1%), Volkswagen (-2.3%). The Btp-Bund spread, at 276 points, tires the banks: Banco Bpm (-3.5%), Ubi (-3.2%), Unicredit (-2.2%) and Intesa (-1.8%)*. Therefore, to conclude, we can say that particularly hard was the repercussion on the quotations so much to begin to think, if this this war should continue, that the most extreme scenario could be a global trade war.The analysis of the global economy is certainly important for investment decisions and for business prospects. In agreement with the World Economic Outlook Report, I believe that the global economy is growing even if with a slowdown compared to 2017 and 2018. The factors that have influenced this slowdown are the commercial tensions between China and the United States. In the Euro zone, on the other hand, the slowdown is due to a decline in consumer and business confidence. Germany, for example, has stopped car production following new emission standards. Italy has seen a decrease in investments due to the expansion of sovereign spreads.Therefore, growth is weakening but the world economy should grow by 3.3% in 2019.Analyzing the GDP growth rate for 2019 we can see that the geographical areas that will show the highest growth rates are South Asia, Asia that faces the South China Sea, East and West Africa.Among the Asian countries we find India and Bangladesh, with growth rates above 7%; followed by Vietnam, the Philippines and China, with rates above 6%; Indonesia stops just over 5%.Among the countries that will grow the most do not include, with rare exceptions, those of the EU.Only the growth expected for Ireland exceeds 4%. In Eastern Europe they exceed the threshold of 3.5% Poland, Slovakia and Hungary, while Romania and the Czech Republic are around 3%.The blockade of Western European countries follows: of these, only Luxembourg, Greece and Spain exceed 2%; the majority of Western EU countries, on the other hand, are between 1% and 2%. Finally, Germany (+ 0.8%) and Italy (+ 0.1%) are at the bottom of the table. In a market context characterized by slowing economic growth prospects, I recommend investing in Amazon shares.Amazon is the world’s largest online store. It was founded in 1995 by Jeff Bezos as a digital bookstore and became the first global e-commerce operator. Amazon’s strong points that have enabled a small website to become a giant are its strong propensity for innovation and a unique customer experience.Over the years, Amazon has been able to significantly innovate the product range, becoming an international benchmark. It seems that Amazon’s success knows no limits.Today Amazon has succeeded in creating other sites in different parts of the world and is able to ship merchandise anywhere.In 2017, Amazon acquired Soug, a widespread online distribution company operating in the Middle East, an area where Amazon had, and has, expansion difficulties. Recently the acquisition of Plug Power (23%), an American company that produces hydrogen batteries, was announced. Undoubtedly evolution, and reaching new commercial horizons are the keys to Amazon’s success. For some time, the most famous e-commerce site in the world has also been offering movies and TV series in streaming, online books to download, music and Prime subscriptions with which to have significant discounts on shipments and particular services. The Amazon shares are listed on the Nasdaq Global Select Market, are also part of the calculation of the Nasdaq 100 stock market index. Most of the share capital is in the hands of large institutional investors, including State Street Corp. and Royal London A.M.Given the “global reputation”, Amazon shares have many positive elements. The position of global leadership, the speed of expansion, the competence in e-commerce, the absence of large investments to expand its business, compared to shopping centers or supermarkets, bring out the strength of the company.Amazon’s actions express the full potential of an evolving society. They are actions of a solid company capable of looking to the future by meeting the needs of an increasingly sophisticated clientele.Taking a look at the prices (from the origins) of Amazon shares, after about 10 years of listing, the value of the shares has almost tripled. Interesting the course of the actions started from 2015, in a still bullish phase, where it has gone from a quotation of approximately Usd 300, to Usd 1200 – Usd 1300.I personally recommend investing in Amazon shares over the long term.A lot of investors already own Amazon shares and presumably have made tons of money by swapping the stock. But for long-term investors who have managed to avoid selling significant amounts of shares, they are the ones who have benefited the most since the stock’s performance, thanks to their vision or wisdom for having decided to bet that Amazon was one stock with “Amazonian” powers.