OK, everybody, let’s get excited about 2015. Sure, there’s Ebola and Vladimir Putin and Islamic State terrorism. Western Europe is back in an economic rut, Japan’s recovery is faltering again, and China looks as if it’s headed for its slowest growth since 1990. But there are good things happening, too. Like, well, strong sales of recreational vehicles made in northern Indiana! “We’re in the recovery—we’re recovered,” says Derald Bontrager, chairman of the Recreational Vehicle Industry Association. “Obama visited this area three times. We were referred to as the ‘white-hot center of the economy.’ ” Bontrager, the chief executive officer of family-owned Jayco in Middlebury, Ind., predicts the industry will tie unit sales records in 2015 and break them in 2016, thanks to rising U.S. employment and continued low interest rates.
The good times aren’t confined to northern Indiana, the hub of RV manufacturing. The U.S. as a whole is emerging as the most likely candidate to power world growth in 2015. North Dakota is crazy busy with shale oil production. Seattle is swamped with Boeing (BA) orders. In Silicon Valley, Apple (AAPL) is selling tons of iPhones. New York City has more jobs than ever, as tech companies such as Google (GOOG) (with more than 4,000 employees in the city) lead the way.
It’s a welcome turnabout for the U.S., which until recently was the planet’s pariah. Japan called the 2008-09 financial crisis the “Lehman shokku,” and France dubbed it “la crise des subprimes.” After political brinkmanship brought the federal government within a whisker of default in 2011, China’s Xinhua news agency warned, “It is time for the naughty boys in Washington to stop chicken games before they cause more damages.”
Now it’s the rest of the world that’s botching things. The International Monetary Fund called global growth “mediocre” in October in its latest outlook. Chief Economist Olivier Blanchard wrote that “secular stagnation in advanced economies remains a concern,” and emerging markets can’t grow as fast as they used to without inflation.
Whether you’re the CEO of a multinational or a sole proprietor, it pays to have a sense of where the opportunities lie and the dangers lurk in 2015. That’s what this special issue is about. In the following pages, we offer a detailed look at key people, industries, and regions, along with the most important emerging trends. This introduction focuses on the macroeconomic picture—in other words, the conditions that will help or hinder all you strivers in 2015.
The map gives a snapshot of what’s ahead, based on the latest IMF forecast. South America is a mess, with Argentina and Venezuela leading the losers’ parade and Brazil not far behind. Russia and Western Europe are weak. All three economies of North America are looking pretty solid. The strongest growth is projected to be in South and East Asia as well as much of Africa, which is starting from a low base. Then there’s Greenland, which is … large. (The Mercator projection exaggerates the polar latitudes.)
The unifying theme is that the global economy is taking longer than expected to recuperate from the bursting of the debt bubble during the last decade. Three years ago, the IMF projected that the world economy would be back on track by 2015, growing at 4.8 percent. The U.S. has pretty much met the IMF’s (diminished) expectations. The disappointments, says the IMF, have been the BRIC nations—Brazil, Russia, India, and China—as well as parts of the Middle East, Europe, and Japan.
That’s led the IMF to reduce its forecast for 2015 global growth to 3.2 percent. It projects 3.1 percent growth for the U.S. next year, just 1.3 percent in the euro area, and 0.8 percent for Japan. China’s projected 7.1 percent growth, high compared with other nations’, would be the country’s lowest in 15 years. China isn’t geared for such a slowdown: Indebted investors such as property developers could default on a large scale if expansion comes in much below their expectations. The disparity in growth rates among the big four economies—the U.S., China, Japan, and the euro zone—was what Treasury Secretary Jacob Lew was referring to in October when he told Bloomberg, “You need all four wheels to be moving, or it isn’t going to be a good ride.”
Expect continued dissonance among economic policymakers in 2015. A taste of that came in late October, when the Federal Reserve announced it was ending its third round of bond buying—and two days later, the Bank of Japan said it was expanding its own bond purchases. Quantitative easing, as the bond purchases are called, is designed to drive up the market price of bonds. When prices rise, yields fall, lowering the rates for mortgages and other loans that matter to consumers and businesses. Next year, the European Central Bank may embark on its own quantitative easing over the objections of Germany’s conservative Bundesbank. That “remains our expectation for early next year,” economists at Barclays (BCS) wrote on Oct. 31.
(Bloomberg Businessweek)
