2015 Global Markets Trends & Forecasts

Global GDP2

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.

Sources:

  1. http://www.goldmansachs.com/our-thinking/outlook/2015/index.html#infographic
  2. http://www.businessweek.com/articles/2014-11-06/2015-global-economic-outlook-better-than-2014-but-not-by-much
  3. http://www.businessinsider.com/business-insider-global-20-2014-2014-1?op=1 

World Cup Brazil Will Generate $4 Billion for FIFA, 66% More Than 2010 Tournament

World Cup Brazil will generate $4 billion in total revenue for FIFA, or 66% more than the previous tournament in South Africa in 2010. The vast majority of the money will come from the sale of television and marketing rights. The World Cup generates more revenue for its association than any other sports tournament, save the Olympics (based on revenue per-event-day, the NFL’s Super Bowl reigns supreme). FIFA’s profit for the Brazil World Cup: $2 billion.

Almost all of the revenue FIFA generates comes from television rights ($1.7 billion) and marketing rights ($1.35 billion) from corporate partners like Adidas Emirates, Sony , Visa V+0.87%, Hyundai and Coca-Cola . Blue chip companies love to throw money at the World Cup because it is followed passionately throughout most of the world.

FIFA research, which took a year to produce after the 2010 World Cup in South Africa, said 909 million television viewers tuned in to at least one minute of the 2010 final at home. Some 619.7 million people also watched at least 20 consecutive minutes of Spain’s 1-0 extra-time win over the Netherlands in Johannesburg. More than 3.2 billion people watched live coverage of the 2010 tournament for a minimum of one minute. The average official rating was 188.4 million for each match.

The 2010 Men’s World Cup drew the most US viewers ever for the tournament. ESPN announced that broadcasts averaged a 2.1 rating (2.29 million households and 3.26 million viewers), a 31% increase over 2006. The final between the Netherlands and Spain was the most-watched men’s World Cup game with 15.6 million viewers.

Read full on Forbes

WTO Director-General spoke in Washington D.C., Oct. 1 2012

Source: WTO Website

On October 1, 2012 in Washington D.C.,  WTO Director-General Pascal Lamy gave a speech at Brookings Institutes about the future of trade.  In his speech, he mentioned about new trading powers – China, Brazil, India, Mexico and Malaysia as the drives of global export growth. Nature of trade has changed because of the increasing integration of production of products.

“For centuries, the mercantilist approach of single country product was a driving force in trade policy”, Lamy said, and has still been a heated argument about whether exports were good and imports bad.  It is now very hard to disintegrate the goods and services since nearly 60% of the merchandise trade happened in components.  Such changes in the nature of trade from single manufacturing sites to global value-chain productions has urged for re-thinking of our trade calculation. According to Lamy, “if the measure of trade was in value-added rather than gross statistical terms, bilateral trade balances would look very different” – WTO economists believe that China’s $295 billion trade surplus with the U.S. would be reduced by nearly half.

On the other hand, Lamy also suggested that tariffs and other trade regulations can have profound impact in trade.  He points out that an “open” conversation on international trade should be facilitated given the changing environment.

For more information: http://www.wto.org/english/news_e/sppl_e/sppl250_e.htm

Learning More About The Global Consumer: The Boston Consulting Group

If you are interested in reading a little bit more extensively about how consumers have been affected by the financial conditions, I recommend reading this recently released report by the Boston Consulting Group. They describe and contrast the consumer climates in several different regions, highlighting key differences between Western nations and the BRIC( Brazil, Russia, India, China) markets. The report ends with six suggestions for businesses to adapt to the new consumer conditions.

Click HERE to read the report