The Week Ahead

The Week Ahead

Republican National Convention will test the unity of Donald Trump’s coalition. IMF releases latest macroeconomic forecasts. Greek Parliament votes on electoral system reform. NATO and Persian Gulf ministers meet in US. G-20 meets in China. All in the Week Ahead.

Republican National Convention will test the unity of Donald Trump’s coalition

From Monday to Thursday the Republican Party will host its presidential nominating convention in Cleveland, Ohio. This convention will be a major test of whether or not Donald Trump will be able to unify the fractured Republican Party around his candidacy. His effort may have gotten a boost when he selected Indiana governor Mike Pence last week as his vice presidential running mate. However, the governor’s past history on LGBT legislation as well as the Obamacare Medicaid expansion are likely to be difficult to traverse both with the Republican Party as well as the general electorate.

In addition to Pence and Trump, other speakers at the convention will include Donald Trump’s family members, a bevy of extremely unconventional speakers, and a few elected officials, including Senators Ted Cruz and Tom Cotton. However, the convention will be notable in the attendees likely to be absent, including: all living former Republican presidents and Republican nominees, with the exception of Bob Dole, most of the Republicans who ran for the presidential election this year, as well as several governors and most Republican senators running for reelection. This will be Donald Trump’s best possibility to show to the American electorate that he and his party have both the gravitas to serve as commander and chief as well as his intellectual heft to cover domestic and foreign policy issues.

In addition, on Wednesday, the Federal Election Commission will release its June report on Donald Trump and Hillary Clinton’s fundraising totals. Last month’s totals, which had Hillary Clinton fundraising upwards of $40 million and Donald Trump failing to secure event one-quarter of that, are not likely to be replicated. Early reporting appears to indicate that Trump has lifted his fundraising to over $50 million while Secretary Clinton has secured over $70 million.


IMF releases latest macroeconomic forecasts

On Tuesday the International Monetary Fund will release its most recent global macroeconomic forecast. This will be the IMF’s first crack at exploring the global economic impact in the short and medium term of the Brexit vote, particularly as the new government under newly-installed Prime Minister Theresa May begins to take shape and May begins to set out her legislative goals, including voting to renew the Trident program.

Commentary has already indicated a wide array of economic impacts that could result from the formal exit of the UK from the European Union: the reemergence of trade barriers and the UK’s trade negotiations with key trade partners; the possible move of the western world’s 2nd financial capital from London to Paris, Berlin, or possibly even Dublin; and the pound’s impact on UK exports. Other areas around the world the IMF’s report may explore could include US monetary policy, the economic impact of the weak political environments in Brazil and Europe, and of course China’s growth patterns.


Greek Parliament votes on electoral system reform which could make future governments less stable

On Wednesday the Greek Parliament is slated to consider a bill to replace its current electoral system that provides a 50-seat bonus to whichever party secures the most votes with a system that is fully proportional. Although Prime Minister Tsipras will be unable to enact this legislation for the next election — it would require a two-thirds majority to pass, unlikely given Syriza’s bare majority in parliament — such legislation would apply to all subsequent elections. Given the high number of prominent political parties in Greece, a direct PR system would make it difficult in such a system to forge an effective political majority, particularly given the wide spectrum of political beliefs that include the far left Communists and far right Golden Dawn.

Although such a political system is likely to be more reflective of the will of the Greek electorate, this could make the political environment in Greece unstable.In the past several years, there have been several governments that were unstable due to the broad preponderance of political parties that both made policy innovation hard and made significant economic policy decisions more difficult. Should Prime Minister Tsipras succeed in revising the electoral system this could make the broad types of reforms that have been undertaken recently by the Tsipras administration more difficult in future administrations and could make negotiations with the EU more complicated.


NATO and Persian Gulf ministers meet in US to discuss ISIS operations

On Wednesday defense ministers from the North Atlantic Treaty Organization and the Persian Gulf states will meet at Joint Base Andrews in Maryland to discuss efforts by both groups to counter the Islamic State. While the Islamic State has suffered a number of territorial setbacks recently, and while ISIS has apparently begun lowering expectations and preparing supporters for future territorial losses, recent attacks in Baghdad, Istanbul, Dhaka, several cities in Saudi Arabia, and Nice has thrown into sharp relief the costs of pushing a dangerous terrorist group into a corner.

Both NATO member states and Persian Gulf nations have strong incentives to maintain a united front against ISIS as the group destabilizes several states across the Middle East and North Africa and threatens citizens across the world. It appears though that the recent attacks in the Middle East are likely to escalate collaboration between Europe, the US, and major anti-ISIS Middle Eastern states to quash the efforts of the terrorist group. Whether any concrete initiatives emerge from this meeting remains to be seen. However, it is highly likely that NATO and the Gulf States will rachet up collaborative efforts to eliminate an organization that both groups have recognized as a severely detrimental, existential threat to their domestic citizenry.


G-20 finance ministers and central bankers meet in China ahead of G-20 Summit

On Saturday the finance ministers and central bank governors of the world’s 20 largest economies will be meeting in Chengdu, China in preparation for the G-20 leaders’ summit in Hangzhou. This meeting follows a string of meetings from agriculture ministers, deputy finance ministers, energy ministers, and others ahead of the summit.

While it is unlikely that any major initiative will be announced following the meeting, this will be a significant opportunity for Chinese, Russian, Brazilian, US, French, and other central bank leaders to digest the significance of the Brexit vote on both their domestic economies as well as everyone else’s. It is very likely that there will be interest in the US interest rate leanings of Federal Reserve Chair Janet Yellen, as well as how the other central bankers will react to any possible rate increase from the US or a rate decrease in the UK.


The Week Ahead provides analytical foresight on the economic consequences of upcoming political developments. Covering a number of future occurrences across the globe, The Week Ahead presents a series of potential upside/downside risks, shedding light on how political decisions affect economic outcomes.

The Week Ahead is written by GRI analyst Brian Daigle.

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