2014 Economic Review and Themes for 2015
Economic Viewpoint with Keith Wade, Chief Economist & Strategist, Azad Zangana, Senior Economist and Craig Botham, Emerging Markets Economist
In this month's Economic Viewpoint, Keith Wade, Chief Economist & Strategist, Azad Zangana, Senior Economist and Craig Botham, Emerging Markets Economist give their views on:
- Geopolitical risk returned in 2014, having a significant impact on markets. Central banks were busy going in opposite directions and contributed to volatility. Oil prices dominated the end of the year, plunging Russia into crisis, but leaving some upside risks for 2015.
- Investors saw good returns from both government bonds and equities. Shrinking flows of government debt instruments may have helped lower yields against a backdrop of growing liquidity. In equities, only the US index outperformed in US dollar terms.
- The latest fall in oil prices moves the cost of energy well below the assumptions we used just a month ago. Overall the clear implication is that growth will be stronger and inflation lower.
- Some might term this a ‘disinflationary boom’ and that is our first theme for 2015. The three other themes are: the ‘desynchronised cycle’, where the US continues to lead the world economy; ‘Japan: winning the currency war’, where Japanese firms use the latest move in the JPY to gain market share; ‘Back to the 1990s’ whereby the Federal Reserve is distracted by external events, keeps policy too loose and fuels a domestic bubble.