GDP forecasts and their effects on US automobile industry competitiveness

¶ … GDP forecast for the next 18 months is bound to have an impact on the industrial figures in general and, in particular, on the automobile industry, in terms of production and revenues.

First of all, a GDP forecast will influence the foreign investments in the United States. The reason for this is quite simple and it revolves around the confidence concept. A positive GDP forecast will mean that the American economy is presently performing well and, even more important, that it will continue to perform well into the future as well, with an ascending GDP trend.

For a foreign investor, this will mean that acquiring American assets is a less risky and more profitable action than in a different situation. The fact that you have a positive forecast for the next 18 months is bound to show that the economy is producing, that the figures are satisfactory and that you will have a satisfactory return on your investments.

Acquiring American assets by foreign investors will have a direct impact on the U.S. dollar and on the exchange rate between the dollar and the world's most important currencies. An increased confidence in U.S. assets is equivalent to an increase in the U.S. dollar price, an appreciation of the U.S. dollar compared to the other main currencies. The increased interest in U.S. assets will mean an increased demand for them and, since the price for them is paid in U.S. dollars, an increase in dollar purchases is the logical economic move.