AFRICANGLOBE – Despite their mixed record last year, Future Development’s bloggers once again offer their predictions for 2015. Eight themes emerge.
1. Global growth and trade. The US economy will strengthen far above predictions. Together with lower oil prices and a better business climate in emerging markets, this will create substantial positive spill-overs, including to the smaller export-oriented Asian economies, boosting the growth of their manufactured exports well above recent trends. The US will look to open new free trade agreements in Asia—India may try to join—and seek opportunities to do the same in Africa. Meanwhile, Germany will face increasing resistance to the free-trade agreement with America (TTIP), just as Angela Merkel celebrates her 10th year in office.
2. Europe. Lower oil prices will force Russia into a compromise on Ukraine. This should boost European investor confidence and Euro-Zone growth will surprise on the upside.
3. Latin America. Latin America will experience a rough year with social upheaval in Venezuela and Argentina. Brazil will go through tough economic times but its political system will not only survive but emerge even stronger.
4. Africa. 2015 will be a mixed year for growth, poverty reduction, and stability in Africa. Nigeria will suffer the consequences of declining oil prices and political and social upheaval related to the 2015 general elections. In southern Africa, political maneuvering to replace presidents in Zimbabwe and South Africa is likely to intensify, with consequent heightening of political uncertainty and a decline in foreign and domestic investment. Other elections in big or fragile countries (Ethiopia, Tanzania, Burundi, Chad, Niger), however, will consolidate the democratic gains achieved over the past decade. Lower commodity prices and the popular revolt against former Burkinabe President Campaore’s attempt to extend his term-limit, will discourage other leaders from extending their mandates, leading to more peaceful democratic transitions. The pace of investment into Africa will slow, as exploration money drops off and higher US interest rates attract foreign investment to the US; but many investors will see the long-term potential of African industries such as renewable energy, fashion, farming and fisheries; and African leaders and their partners will recognize that they need to seize the opportunity to attract foreign investment now – a very slim window exists.
5. Asia. Asia will continue to do well on growth, benefiting from strong regional dynamics as well as strong US demand for imports. Its gradual restructuring toward meeting domestic demand will continue to serve it well. Asian firms will become more significant globally as innovators and competitors.
6. Middle East and North Africa. The decline in oil prices will slow growth in oil exporters while boosting it slightly in oil importers. Facing budgetary pressures, many oil exporters will reduce their energy subsidies, leading to more efficient economies. Despite a more favorable external environment, oil importers will not slow their reform momentum.
7. Innovation. 2015 will be a defining year for technological progress with leaps made in space travel, electric cars, use of drones and ‘smart’ devices with health applications.
8. Demography. In 2015 we will see the global historical peak in the working-age population (16-64) of 66 percent. New research will also emerge pointing to a stagnation (and eventual decline) of the world population in the second half of 21st century. For the first time, the population debate will shift from the risk of a “population bomb” to concern about global population decline.
Our bloggers lamented the fact that there were no major sporting events in 2015, since that was the one category where last year’s predictions were unambiguously correct. Instead, they offered predictions about the weather (“it will rain in Delhi sometime during the week of Bastille Day“), or history (“former Spanish dictator Francisco Franco will remain dead”). Finally, one blogger forecast the outcome of our forecasts: “I predict that about half of our predictions will be wrong, and half right (including this one).”
By: Shanta Devarajan