Inflation
The main cause (or at least one of the reason) of this world-wide inflation is primarily due to USA. There was a period when commodities, raw materials and consumer goods were relatively cheap when China was the world production factory. China churned out millions of products and consumer goods that were exported worldwide. From low-tech items such as children toys, daily used items such as clothes to high tech products such handphones, servers and networks system to IT infrastructure. USA sees China as threat, impose trade tariffs across thousands of products and services and restricts China expansion by coercing companies and allies to limit investments (tech and non-tech) in China. The scopes include ordering high tech companies to stop setting up factories in China, forbade export of technologies that is deemed to threaten national security etc. Eventually, it made companies to “return” and even offered grants to bring them back home so that they can make USA great again.
All these actions (tariffs, restriction on technologies export, re-location of production centres etc) drives up costs as such activities have both upstream and downstream impact on logistics & transportation, re-routing of goods and raw materials, reassignment of manpower etc. The consumers in USA bear the cost of the government policies and companies transfer the rising costs to them. USA is pre-dominantly a more expensive country to set up production centres as its cost are higher (the same reason why US companies shifted out of the country in search of a cheaper place to produce their goods).
Looking at the current world situation, with 2 wars on-going right now and not so favourable USA economy reports, my initial prediction of FED rate-cut look unlikely to happen this year.
The main concern now is whether the market is heading for a possible meltdown and depression take over. Singapore is lucky to have a strong Sing dollars to mitigate some of the costs, or the inflation could be higher than it is now.
Do you agree USA is the main cause of this inflation? Would like to hear your opinions on this.
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