Surviving Shocks from the American Economy

America is the largest economy in the world. The influence of the American economy is so entrenched in the world that any shocks that America suffers are felt in most economies. For instance, the financial crisis of 2008 was much felt beyond America into Europe, Asia, and beyond. The interconnected nature of the global economy today makes it prone to shocks from the Big Brother. However, there are strategies that countries and businesses can put in place to withstand shocks emanating from the American economy.

Diverse Trading Partners

Being the largest economy, America has numerous trading relations with most countries around the world. In such circumstances, the, influence of the American economy is real to businesses and households around the world. To minimise the effects of American economic downturns, there is a need to have diverse trading partners. This ensures that companies can buy and sell most of the time, regardless of the health of the American economy.

Invest in Renewable Energy

Most of the largest economies in the world, America included, depend on fossil fuels to power their industries. Oil-producing countries tightly control its production. With the rise and fall of oil prices felt across the world, high prices inevitably lead to higher cost of production. To survive the fluctuating and cartel-controlled oil prices, economies might consider investing in renewable energy such as solar and wind. These forms of energy, besides being eco-friendly, are cheap hence lowering the cost of production, making economies competitive in the global marketplace.

Wean Dollar Dependence

The United States dollar is the most dominant foreign exchange and trade currency. A shock to the dollar is most likely to be felt across the globe. To survive American shocks, world economies need to have their forex reserves in other currencies besides the U.S dollar. Additionally, maintaining reserves in gold might also cushion economies from external shocks.