The currently world is a scary and unsettled place with the economy in choppy waters, however surprisingly, Britain’s economy has enjoyed increasingly smooth growth with the election around the corner.
2015 has started; experts have assessed the risk ahead for the global economy and especially Britain. Will we see Britain rocked by the storms, or emerge to be one of the leading economies again? Below is a short summary of the expected issues which will face various parts of the world economy this year.
Oil producing nations such as Saudi Arabia will keep an eye on the price of oil in 2015, as the price of oil depreciate and could start to see those producers in anguish. This is good news from a consumer aspect; however it could make it harder for those countries to maintain a profit and eventually could lead to a price rise in oil in the near future.
At the end of 2014, the themes include the sharp fall in the price of crude oil which has now declined down to 42% since late June. A recovery in the oil price will depend mainly on when Saudi Arabia decides it has regained control of the global oil market as US have now entered the market with the production of shale gas which has currently taken over as the largest global oil producer. Reports show that the US plans on lifting the 40 year old oil export embargo due to the need for suitable refining as the US becomes self-sufficient.
The fall in oil could be felt by economies like Japan as the nation could struggle to hit its 2% inflation target if the price of oil continues to fall and could lead to the Bank of Japan (BOJ) to use further instruments stimulate growth. Japan could yet face as it was stated last year that they were in a recession, could yet face another tricky year if strategies do not reap economic benefits which could again put the BOJ credibility into question.
Economic drama is set to occur right here in Europe as European leaders aim to pull the Eurozone back from the brink of ruins. The ECB states that their aim is to try and hold the Eurozone together so that 2012 issues do not occur again even though Italy and Greece are suspected to pile on pressure to the European economy yet again. The Eurozone could slip into a Japanese scenario of deflation and little growth. Given the political tensions around the monetary issues, the Eurozone may end the year with a poor performance in 2015. EU constitutions have much to lose, politically and financially, from European disintegration. It seems to be time to recognise that debts cannot be repaid and restrains on government spending will not work and could cause the death of the EU
China’s economy has been motoring along nicely over the last few years, but the worry seems to be about whether 2015 will be the year that it starts to peter out, with potentially big outcomes. China has been the main engine behind global growth due to its export processing zone and is now facing real risk of effect s such as the property slump and concerns related to its increase in bad debts in its home-based financial institutions. If China begins a downturn in its economy, investors may take fright and move their money elsewhere to avoid market volatility issues. Negative devaluation of the renminbi could weigh on all the other emerging markets and lead to large capital outflows.
America is expected to storm on ahead, but the question is will it cope with its strong economic rivals? American exports could get hit by the poor conditions, forcing the government to push back up the interest rates to avoid then borrowing and affecting the fiscal deficit.
2015 looks set to offer a range of unexpected economic risks, just as 2014 did before with the Ebola virus outbreak disrupting air traffic, terrorist activity in the Middle East, and tensions with Russia over its seizure of Crimea sending shockwaves to the financial market.
If you think 2014 was anything for economic issues, then 2015 will be bigger and hit the world economy even harder.