You might start your new year with positive energy but the year hasn’t started so positively. The economic prospect of the year looks glimmer than we can expect though it does not mean we must expect the worsening conditions.
The World Bank statistics show the economic growth has stagnant to 2.4 per cent from the earlier estimation of 2.6 per cent in 2015. The bank puts its estimation for 2016 to be at 2.9 per cent. The volatility that we saw on the first week of the new year gives us little indication that it might be worse than estimation.
Following the GFC, the world economy heavily shifted its reliance from US to Chinese growth. For last several years, rise and fall in the market were directly influenced by Shanghai performances. This reliance will be stronger in the years to come as China plays greater role in the world economy.
However, the Chinese market did not show positive signs to start the new year. The local authority had to put two emergency circuit breakers to stop it from being collapse. The ripples felt across most Asian and western economy. The fall probably could be the result of continued slowing down of the Chinese economy – more precisely coming out from slowing manufacturing industry.
Forbes estimates emerging economies would further worsen in 2016. This would possibly be the result of continued political instability and escalating conflicts. The political leadership in emerging economies are more focused on power struggle than working towards stability, growth and peace.
The advance economies appear to have finally come out of the long recession. The EU region, as per IMF, is posed to grow by 1.9 per cent. It has recovered from most the lost ground of the GFC. US expects a positive growth but will not lead the world economy any more.
Chinese economy poised to grow by 6.9-7.0 per cent. It certainly will lead and influence the world – further strengthening dragon’s economic empire.