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10 threats to globalisation in 2017
 
Johannesburg - Globalisation as we know it is changing and is slowly being replaced by a multipolar world, research by Credit Suisse revealed.
In its recent Globalisation report, Credit Suisse Research Institute (CSRI) explained that multipolarity involves the shift of power in terms of trade, GDP, foreign direct investment (FDI), budget size and population. These powers will be less concentrated in a specific region and will be shared across different regions.
READ:
Globalisation took hits in 2016, will 2017 lead to more?
Fin24 previously reported that the US election of President Donald Trump as well as the UK voting to leave the European Union (EU) signal that the world is moving away from globalisation. This is raising questions over future trade agreements. 
The report highlighted 10 trends that pose a threat to globalisation in 2017. These are:
1. The health of trade
The Trans Pacific Partnership (TPP) between the US, Japan and a group of Aisan countries as well as the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU may not be approved. Trade obstructions across the world are also growing.
2. Debt
Zero and negative interest rates means that more debt can be taken on. However, now that rates appear to be rising, this may put pressure on companies and countries, especially considering debt levels are at record highs since 2007.
3. Immigration
Immigration is a key issue especially in Europe and is one of the contributing factors that led to the UK voting to leave the EU.  
4. When will be the next recession?
In Credit Suisse’s view, the next recession may not be “far away” given high debt levels in China and low corporate margins.  
5. Military confrontation by accident or design
The South China Sea is frequently mentioned by commentators as a theatre for large power confrontation, stated the report. Other areas may also spark conflict, this includes Japan and Syria, where the conflict is becoming more complex.
6. Stealth attacks or cyber war
Cyber-attacks on companies are becoming more common and they may start having more far-reaching effects.
7. Central banking accidents
A policy move causes a central bank to lose credibility. For example, if a central bank pushes too hard for inflation, it may see the currency exchange increase.
8. People tire of consumerism
The Credit Suisse emerging consumer surveys have highlighted the decline in consumer demands and changing preferences. Difficult labour market conditions in some countries, like South Africa where consumers were less optimistic about their income outlook, and growing wealth inequalities may reduce consumer demand for material acquisitions.   
9. Multipolar jurisdictions harden
In order to maintain geopolitical and economic power, more countries may ignore international law. Different regions may start adopting “their own way of doing things” to the detriment of trade and potentially human rights.
10. Climate events
The year 2016 was the hottest year since 1880, the repeat of this may strain farms, food supply chains and could provoke a humanitarian crisis. 
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We’re currently experiencing serious technical problems on the site, and as a result are unable to update the news – even though our market data is running as per normal. We sincerely apologise for any inconvenience caused and hope to be up and running again this evening. Thank you for your patience in this regard. – David McKay (editor) & team
Moody’s may downgrade SA in coming weeks - economist
 
Cape Town – Moody’s rating agency, which has South Africa at the second-lowest investment grade level, may downgrade the country by one notch in coming weeks without visiting it first, according to Nomura economist Peter Attard Montalto.
“There now seems to be some possibility, which we had previously underplayed, that Moody’s may downgrade in coming weeks without a visit,” he said in a market note on Tuesday.
“The original view was it would visit sometime towards the end of May and then report mid-June before its July 3 window deadline. This would take the market by surprise probably (the timing, not the move). The consensus seems to still be a one-notch downgrade, maintaining negative watch.
“Our original view of S&P downgrading South Africa’s local ratings to junk this year remains, but our previous view on the likelihood of it happening in its June 2 update seems a little early now (especially with the pushing back on the timing on the no confidence vote), so we shift our view more towards its year-end update on November 24 after the (mini budget)."
S&P already downgraded South Africa's foreign ratings to junk status in April, while Moody’s
placed it on downgrade review on April 4
and Fitch downgraded both foreign and local ratings to junk status in April.
"We think the governor’s intervention last week on Bloomberg TV – to criticise markets’ excessive focus on rate cuts – is the start of a more aggressive push back on ‘it’s obvious it is going to cut /it has to cut’ market mind-set (of locals especially)."
Moody's said President Jacob Zuma's massive Cabinet reshuffle shortly after midnight on March 30, which claimed the jobs of former finance minister Pravin Gordhan and his deputy Mcebisi Jonas, raised questions about progress on reforms previously identified as essential to sustain South Africa's fiscal and economic strength, and the effectiveness of South Africa's policy-making institutions.
It also raised questions about the more immediate implications for growth and public debt given the potentially negative impact on fragile domestic and external investor confidence, Moody's said.
"The review will allow Moody's to assess these risks, and if the changes in leadership signal a weakening in the country's institutional, economic and fiscal strength."
Montalto’s view comes after
Bloomberg reported on May 2
that representatives from Moody’s plan to visit the country in coming weeks to review its ratings.
Bloomberg also quoted the SA Reserve Bank as saying that a further deterioration in ratings may lead to capital outflows, cause funding costs to increase and reduce credit available for businesses.
The severity will depend on the extent to which further downgrades are already priced in, it noted.
“Further downgrades on the local currency rating could trigger high levels of selling off of bonds by foreign investors, which could also result in marked currency depreciation,” the Reserve Bank said.
Finance Minister Malusi Gigaba
said there are no silver bullets or guarantees
that will stop Moody’s from downgrading South Africa in the coming weeks, but government is engaging directly with the ratings agency, assuring it of the country's commitment to fiscal discipline and consolidation.
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