From Goods and Service Tax (GST) to Toronto’s Housing Bubble, the year 2017 has seen major financial breakthroughs, events and development that have affected and will potentially evolve the financial world. Following mentioned are the 5 major events that occurred in 2017 that have had and will continue to have a major impact in the world of finance.
1. Surging value of Bitcoin
Bitcoin and its rising value has been one of the hottest topics among all the market gossip during year 2017. Bitcoin is a cryptocurrency and the first decentralized digital currency which serves as a worldwide payment system. It reached its all time high value $19,498.63 on December 18th 2017 (about 1600% of its value). This is percieved as a bubble by many which might burst anytime.
2. Goods and Services Tax
Apart from political and economical turmoil, Goods and Services Tax has brought in instability in the financial world as well. Goods and Services Tax is an indirect tax imposed on the goods and services bought and sold domestically in an economy. In India, GST came into action this year on July 1st. After GST was imposed, not only the businessmen experienced instability but the common man as well. GST has affected the budget of a common man very largely ranging from a restaurant bill to car expenses. Although its effects now are major disturbances but later it’ll get well adapted and serve the nation well.
3. Toronto Housing Bubble risk grew larger
Google searches for ‘real estate’ and ‘bubble’ have taken a high jump this year. This was mainly due to the interest people showed in the Toronto’s housing market. Housing Bubble is a situation when the housing prices rise strongly and continue to rise further simply because people believe that they will rise in future and therefore encouraging more buying. Hence, overvaluation of price occurs.
There are at least 7 cities which are at the risk of housing bubble including Toronto, bagging the first rank. What’s interesting here is that the real prices of the houses in these cities have increased more than 50% since 2011, which is much higher than the local inflation rate. Improving world economic growth, low interest rates and falling unemployment are pushing up property prices and making the bubble grow even larger. The year 2017 has seen this bubble grow larger with rising prices and any day, it may burst. Now, it’s not just Canadians who are waiting to see the updated real estate numbers but the whole world is watching.
4. Rise in digital payments in India
Official statistics indicate that post demonetization; in the year 2017 there has been 80% increase in the digital transactions in India. In November 2017 alone, about 105 million transactions were recorded on the Unified Payments Interface (UPI).
A rise in the average number of digital transactions done through platforms such as BHIM, IMPS, M-wallet and Debit cards was seen this year. This is a great achievement for India both economically and financially.
5. U.S. oil prices hit highest since mid 2015
Oil Industry is going through a difficult time since few years. However, the year 2017 was a small relief to this industry as U.S. oil prices surged highest since mid 2015. Over the years, the world oil prices have been falling due to various reasons. This has affected all the major players in the market, consumers were better off while producers worse off. However, situation seems to improve now. But this good news might last for a short time as oil prices rose because of a surprise fall in American oil output and decreased commercial stroked inventories stoked buying.
6. China opened its finance industry to foreign investors
There has been a cap on foreign investment in Chinese banks till now; however China’s vice minister for finance Zhu Guangyao announced changes this November and said that these restrictions will be removed, enabling foreign investors to own 51% of the security firms, life insurance providers and investment managers. It’s going to be a big revolution in the finance world as these restrictive ownership rules gave China an upper hand in influencing the major decisions. However now, a lot is going to change.
7. United Kingdom: Bad Year for Capitalism
2017 was a bad year of capitalism for UK. Capitalism is a system of an economy wherein its industries and trades are controlled by the private players of the market rather than by state. The reason behind this was that the productivity this year went very low which further resulted in consequences such as decreased pay, falling living standards, low home ownership, social mobility and more. Although 2017 brought pocket full of bad news for UK’s financial world after the 2008 financial crisis, but that’s not it. Changes in UK tax policy due to wealth destruction have lifted up many low income earners out of income tax altogether and the income inequality has also declined.
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Ranu Jain | LinkedIn