By Isaac Cohen*
At least three economic issues are raising questions in 2018: US economic prospects under a new central bank Chairman. If China’s economy will continue slowing down without abrupt turns and finally, whither oil prices.
The US economy closed 2017 with excellent indicators, moderate growth of around 2.5 percent, low inflation and almost full employment. This was recognized by the business community, pushing the stock market to record highs, anticipating the growth spurt expected from the now approved tax reduction. The question is if this robustness will test early the determination of the central bank, under Chairman Jerome Powell, to step on the brakes to prevent inflation.
China’s economy has slowed down gradually, without major disruptions, although lesser rates of growth have led to less imports, which have pushed into recessions several commodity exporters, mainly in South America. The question is if the slowdown in China will continue, at what pace and if it will proceed without abrupt turns.
Finally, oil prices have been climbing over $60 per barrel, which indicates the effectiveness of the production cuts agreed by the Organization of Petroleum Exporting Countries and Russia. Meanwhile, the United States this year will produce over 10 million barrels of oil per day, surpassing Saudi Arabia as the second largest world producer. The question is if the US oil production will provide a ceiling, limiting the damage high oil prices inflict on the world economy, particularly among net oil importing countries.
*International analyst and consultant, former Director ECLAC Washington Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.