2014 gave us a few unexpected turns in the global economy. There was the concern over the long-lasting effects of Ebola, the ISIS, and Ukraine. Aggressive policies regarding climate change have yet to take effect. The economic recovery of Western Europe and Japan are faltering. Brazil, Russia, and China’s growth have come to a halt and are slowing down. The United States, however, has continued its positive recovery and there seems to be a lot of changes in store for international business this coming year. Let’s get ready for 2015.
- Slow but steady growth in the global economy
The global economy is taking longer than anticipated to recover from the debt bubble. The IMF projected that the world economy would be at 4.8 percent by 2015. However, 2014 ended with only a 3 percent growth overall. While the United States has pretty much met its growth targets, the disappointments came from the BRIC (Brazil, Russia, India, China) economies, Western Europe, and Japan. Forecasts have been adjusted for the coming year with an estimated growth of 3.4 percent for 2015.
- Emerging markets dominate
Emerging markets rather than developed economies will fuel much of the growth. The United States will still be a major player in the overall growth of the global economies. However, Western Europe and Japan will grow only an estimated 1 percent and China’s 7 percent will be its lowest in 15 years. Much of the growth will come from Asia and Africa. Specifically, Mexico, Indonesia, Nigeria and Turkey will be on the watchlist for booming economies.
- Oil prices will continue to fall
The demand for oil will decline due to alternative sources and supply in other areas of the world. This will lead to the continued fall of oil prices affecting countries such as Iran, Nigeria, and Russia.
- Climate change will still be a threat
Record-high temperatures continue to be seen with Antartica experiencing its coldest winter so far. Coal is still highly used and international policies to curb this practice are weak. This may lead to drastic effects such as shortages in water and the supply of world’s food system and inevitably contributing to world hunger.
- Innovation, new technologies and hacks will continue to affect us
While spending is somewhat low and demand is weak, businesses are in a better position for recovery by investing in new technologies to get ahead of competition and for future savings. The search for more fuel-efficient machines by Boeing and Airbus is an example of this trend. Another example, is with the United States, who has contributed to innovations in oil drilling thus resulting in an oil boom and affecting world prices.
The global outlook for 2015 should be better than 2014. It may not be much, but it’s way better than negative.
How will these trends affect you and your company? Tell us what you think.