Brazil’s gross domestic product will expand 1.20 percent in 2015, according to a central bank survey of about 100 analysts. That’s the lowest estimate since the central bank started publishing the data in January and a "modest adjust" presented by the economists when compared to the 5.50 forecasted percent of growth in the end of 2013 for this year. “Next year will be a time of adjustments - increases to government |
regulated prices will be needed and measures on the fiscal side must be taken to prevent losing the investment grade rating,” Newton Rosa, chief economist at Sul America Investimentos. “There are no signs that point to a solution to the problems that are affecting industry, specially investments”.
OK, everybody, let’s get excited about 2015. Sure, there’s Ebola and Vladimir Putin and Islamic State terrorism. Western Europe is back in an economic rut, Japan’s recovery is faltering again, and China looks as if it’s headed for its slowest growth since 1990. But there are good things happening, too. Like, well, strong sales of recreational vehicles made in northern Indiana! “We’re in the recovery—we’re recovered,” says Derald Bontrager, chairman of the Recreational Vehicle Industry Association. “Obama visited this area three times. We were referred to as the ‘white-hot center of the economy.’ ” Bontrager, the chief executive officer of family-owned Jayco in Middlebury, Ind., predicts the industry will tie unit sales records in 2015 and break them in 2016, thanks to rising U.S. employment and continued low interest rates.
Whether you’re the CEO of a multinational or a sole proprietor, it pays to have a sense of where the opportunities lie and the dangers lurk in 2015. That’s what this article is about. Following, we offer a brief look at key people, industries, and regions, along with the most important emerging trends. This introduction focuses on the macroeconomic picture—in other words, the conditions that will help or hinder all you strivers in 2015.
The map gives a snapshot of what’s ahead, based on the latest IMF forecast. South America is a mess, with Argentina and Venezuela leading the losers’ parade and Brazil not far behind. Russia and Western Europe are weak. All three economies of North America are looking pretty solid. The strongest growth is projected to be in South and East Asia as well as much of Africa, which is starting from a low base. Then there’s Greenland, which is … large. (The Mercator projection exaggerates the polar latitudes.).
The unifying theme is that the global economy is taking longer than expected to recuperate from the bursting of the debt bubble during the last decade. Three years ago, the IMF projected that the world economy would be back on track by 2015, growing at 4.8 percent. Has pretty much met the IMF’s (diminished) expectations. The disappointments, says the IMF, have been the BRIC nations - Brazil, Russia, India, and China - as well as parts of the Middle East, Europe, and Japan.
That’s led the IMF to reduce its forecast for 2015 global growth to 3.2 percent. It projects 3.1 percent growth for the U.S. next year, just 1.3 percent in the euro area, and 0.8 percent for Japan. China’s projected 7.1 percent growth, high compared with other nations’, would be the country’s lowest in 15 years. China isn’t geared for such a slowdown: Indebted investors such as property developers could default on a large scale if expansion comes in much below their expectations. The disparity in growth rates among the big four economies—the U.S., China, Japan, and the euro zone—was what Treasury Secretary Jacob Lew was referring to in October when he told Bloomberg, “You need all four wheels to be moving, or it isn’t going to be a good ride.”
Expect continued dissonance among economic policymakers in 2015. A taste of that came in late October, when the Federal Reserve announced it was ending its third round of bond buying—and two days later, the Bank of Japan said it was expanding its own bond purchases. Quantitative easing, as the bond purchases are called, is designed to drive up the market price of bonds. When prices rise, yields fall, lowering the rates for mortgages and other loans that matter to consumers and businesses. Next year, the European Central Bank may embark on its own quantitative easing over the objections of Germany’s conservative Bundesbank. That “remains our expectation for early next year,” economists at Barclays (BCS) wrote on Oct.
Fights over taxing and spending will probably heat up next year, especially in the euro zone, where France and Italy are clashing with Germany over how big their budget deficits can be. The European Commission in Brussels allowed the French and Italians to run oversize deficits in October but warned that all euro countries will get an in-depth assessment in mid-November. Germany’s insistence on austerity makes it hard for euro nations to spark economic growth, says Dennis Gartman, author of a daily market commentary. “I tend to be a far right-winger,” says Gartman, “but there are times when you can’t run balanced budgets. When you have 15 percent unemployment, is one of them”; Some things about 2015 are known, such as the continued warming of the planet. Others are unimportant, like who wins the Super Bowl or Brazilian Championship. (Sorry, football/soccers fans.) Keep an eye on things that are unknown and important: Will Russia’s and China’s clashes with their neighbors escalate into armed conflict? Will the Ebola epidemic break out of West Africa on a large scale? Will China snuff out Hong Kong’s democracy movement? Will British elections in May increase pressure on the United Kingdom to drop out of the European Union? Will one of the conflicts in the Middle East boil over? Any one of those could make 2015 a very ugly year.
A Fed hike, whenever it comes, could affect growth, inflation, and exchange rates around the world. All else equal, higher interest rates in the U.S. would tend to attract more investment to the country, pushing up the value of the dollar vs. That probably wouldn’t be enough to damage U.S. competitiveness significantly; even with its recent rebound, the dollar is still cheaper than it was a decade ago. rates rise, countries such as India and Brazil that are fighting high inflation might be forced to raise their own rates to keep their currencies strong and avoid a spike in import prices. On the other hand, Europe and Japan, which have no fear of inflation, might welcome a drop in their currencies, which could spur exports and raise growth. “Devaluing is a mechanism to push deflation abroad,” says Stephen King, chief global economist at HSBC (HSBC) in London. “It’s a 21st century beggar-thy-neighbor policy”.
Whether we want to or not, the baton for 2015 is in the hands of Mrs. Janet Yellen.
By Oderli Feriani, Baltic Trust KB – www.baltic-trust.com
Whether you’re the CEO of a multinational or a sole proprietor, it pays to have a sense of where the opportunities lie and the dangers lurk in 2015. That’s what this article is about. Following, we offer a brief look at key people, industries, and regions, along with the most important emerging trends. This introduction focuses on the macroeconomic picture—in other words, the conditions that will help or hinder all you strivers in 2015.
The map gives a snapshot of what’s ahead, based on the latest IMF forecast. South America is a mess, with Argentina and Venezuela leading the losers’ parade and Brazil not far behind. Russia and Western Europe are weak. All three economies of North America are looking pretty solid. The strongest growth is projected to be in South and East Asia as well as much of Africa, which is starting from a low base. Then there’s Greenland, which is … large. (The Mercator projection exaggerates the polar latitudes.).
The unifying theme is that the global economy is taking longer than expected to recuperate from the bursting of the debt bubble during the last decade. Three years ago, the IMF projected that the world economy would be back on track by 2015, growing at 4.8 percent. Has pretty much met the IMF’s (diminished) expectations. The disappointments, says the IMF, have been the BRIC nations - Brazil, Russia, India, and China - as well as parts of the Middle East, Europe, and Japan.
That’s led the IMF to reduce its forecast for 2015 global growth to 3.2 percent. It projects 3.1 percent growth for the U.S. next year, just 1.3 percent in the euro area, and 0.8 percent for Japan. China’s projected 7.1 percent growth, high compared with other nations’, would be the country’s lowest in 15 years. China isn’t geared for such a slowdown: Indebted investors such as property developers could default on a large scale if expansion comes in much below their expectations. The disparity in growth rates among the big four economies—the U.S., China, Japan, and the euro zone—was what Treasury Secretary Jacob Lew was referring to in October when he told Bloomberg, “You need all four wheels to be moving, or it isn’t going to be a good ride.”
Expect continued dissonance among economic policymakers in 2015. A taste of that came in late October, when the Federal Reserve announced it was ending its third round of bond buying—and two days later, the Bank of Japan said it was expanding its own bond purchases. Quantitative easing, as the bond purchases are called, is designed to drive up the market price of bonds. When prices rise, yields fall, lowering the rates for mortgages and other loans that matter to consumers and businesses. Next year, the European Central Bank may embark on its own quantitative easing over the objections of Germany’s conservative Bundesbank. That “remains our expectation for early next year,” economists at Barclays (BCS) wrote on Oct.
Fights over taxing and spending will probably heat up next year, especially in the euro zone, where France and Italy are clashing with Germany over how big their budget deficits can be. The European Commission in Brussels allowed the French and Italians to run oversize deficits in October but warned that all euro countries will get an in-depth assessment in mid-November. Germany’s insistence on austerity makes it hard for euro nations to spark economic growth, says Dennis Gartman, author of a daily market commentary. “I tend to be a far right-winger,” says Gartman, “but there are times when you can’t run balanced budgets. When you have 15 percent unemployment, is one of them”; Some things about 2015 are known, such as the continued warming of the planet. Others are unimportant, like who wins the Super Bowl or Brazilian Championship. (Sorry, football/soccers fans.) Keep an eye on things that are unknown and important: Will Russia’s and China’s clashes with their neighbors escalate into armed conflict? Will the Ebola epidemic break out of West Africa on a large scale? Will China snuff out Hong Kong’s democracy movement? Will British elections in May increase pressure on the United Kingdom to drop out of the European Union? Will one of the conflicts in the Middle East boil over? Any one of those could make 2015 a very ugly year.
A Fed hike, whenever it comes, could affect growth, inflation, and exchange rates around the world. All else equal, higher interest rates in the U.S. would tend to attract more investment to the country, pushing up the value of the dollar vs. That probably wouldn’t be enough to damage U.S. competitiveness significantly; even with its recent rebound, the dollar is still cheaper than it was a decade ago. rates rise, countries such as India and Brazil that are fighting high inflation might be forced to raise their own rates to keep their currencies strong and avoid a spike in import prices. On the other hand, Europe and Japan, which have no fear of inflation, might welcome a drop in their currencies, which could spur exports and raise growth. “Devaluing is a mechanism to push deflation abroad,” says Stephen King, chief global economist at HSBC (HSBC) in London. “It’s a 21st century beggar-thy-neighbor policy”.
Whether we want to or not, the baton for 2015 is in the hands of Mrs. Janet Yellen.
By Oderli Feriani, Baltic Trust KB – www.baltic-trust.com