2015: Enter the year of uncertainties

Many events, both positive and negative, occurred in the economies of many countries around the world in 2014. The aftermath of global financial crises had adverse effects on both developed and developing economies. The political scenario in Syria, Iraq, Libya, and Afghanistan remained unchanged. The loss of lives, property and human displacement was common and world leaders, organisations and communities failed to control and stop the brutalities. The intensifying troubles in the Middle East, to a greater or lesser extent, were echoed in the whole of North Africa, where local political breakdown was compounded by the fallout from economic and political catastrophes across much of the continent. This was reflected in the ever-swelling flood of refugees and economic migrants converging on the Mediterranean, desperate to reach the promised lands of Europe.
In addition, the world faced killings of innocent people and invasion of states - from Iraq to Ukraine (Crimea) - by stronger ones which showed little respect to the United Nations Charter. There were lethal drone and aerial bombing attacks on innocent civilians by the superpower under the excuse of 'war on terror' whose parameters were not and could not be demarcated. There was torture of alleged international terrorists in defiance of established international human rights norms, corporate crimes including bank fraud, rigging of financial and commodity markets, embezzlement of state assets and money laundering where wrongdoers enjoyed almost total impunity. The unhealthy situation in these countries unremittingly upset the economies of the world especially the affected countries; the underdeveloped and developing countries were the worst sufferers.
The drastic fall of oil price in 2014 had its effects on the economies of exporting and  importing countries. Exporting countries lost huge revenues that affected their economies in many ways and on the contrary, the importing countries benefited from reduction of their production and output costs. The decrease of oil price is the result of conflicts among oil producing countries and the invasion of Ukraine by Russia. The state importers of oil in Bangladesh are greatly benefited as it is making profit but the consumers are not benefited as the oil price was not reduced at par with the international level. This uneven behaviour of the state policy-makers always acts as a block on business development in the country. Most of the countries do adjust the local price with decrease/increase of the same at international level but Bangladesh is always found to be an exception. When the price of oil increases at international market, the policy-makers of Bangladesh never delay increasing the local price nor do they decrease the oil price when the oil price decreases at international market.
Growth rates of many low-income countries were high in 2014, supported by better macroeconomic policies, more favourable business and investment regimes, increased interest from foreign investors, and in a number of cases, strong terms of trade. But vulnerabilities remained. Overall, low-income countries' progress in achieving the Millennium Development Goals were uneven and slow. For a few of these countries, the recent widening of fiscal deficits and higher debt levels reflected a shift in public spending away from essential investment - social priorities and infrastructure - toward higher spending.
     Many of the developing countries could maintain steady growth during 2014 but what would be the position in 2015?  This question is uppermost in the minds of the economists. The new year will bring either vigorous recovery or a return to global recession. We look at the factors that will affect the outcome of 12 months.
The world economy has entered 2015 with a split in the road. One track leads to the self-sustaining vigorous recovery that policy-makers have sought in vain ever since the financial crisis erupted in 2007-08. Lower oil prices get consumers spending and businesses investing. Memories of the biggest recession since the 1930s are finally banished. The rest of the world starts to look like a revitalised US. The other track leads back towards recession. Problems that had been stored up since 2008-09 can be contained no longer. A financial crisis has erupted in the emerging markets. China has a hard landing. Greece sparks off a fresh phase to the Eurozone's struggle for survival. Deflation has set in. The rest of the world has started to look like Japan.
The Russian economy may go into deep freeze in 2015 due to the economic crises arising from the occupation of Ukraine. Even before the dramatic plunge in the rouble in the weeks running up to Christmas, the central bank was predicting a fall in output by 4.5 per cent. Pushing up interest rates from 10.5 per cent to 17 per cent in one move may well help stabilise the rouble and prevent further capital flight - but at a cost. History is about to repeat itself. Just after the debt default of 1998, Russia is slipping into a deep recession. The depth of that slump will depend on what happens to the price of oil and gas, whether the West lifts the economic sanctions that it has gradually been intensifying since last spring. It is predictable that the embargo and sanctions by the US and the West will have teeth-biting impact on the economy of Russia.
The economy of China will be critical to the performance of the global economy in 2015. It is also a net exporter of foreign direct investment. China could soon join the select club of countries with a reserve currency. But 2014 had been an uneasy year as Beijing had tried to control credit surplus left behind after the growth-at-all-costs policy was adopted during the deep downturn of late 2008. Policy-makers have been running a tight ship and the constraints on credit have started to bite.
Growth will be lower in 2015. The question is how much lower. A marked slowdown would affect the rest of the world in two big ways. First, exports to China would weaken. This would affect countries such as Germany, which sells the machine tools needed for China's industrial growth, and those such as Australia that provide China with its raw materials. A slow-moving Chinese economy in 2015 will compound a low oil price. China is expected to maintain its growth rate in 2015 sidestepping the economic crises it has been facing.
The Bangladesh economy had performed well in 2014, managing to keep the inflation rate at 7.2 per cent, GDP (gross domestic product) growth rate at 6.3 per cent and the per capita income rose by US$ 136 and reached US$ 1,190. The economy of the country had lots of uncontrollable challenges. This, in turn, afflicted the economic growth of the country. The investment flow dropped in both public and private sectors. The financial sector, especially the public banking companies, suffered badly due to huge loan defaults by their clients, large-scale loan scams and corruption. The stock market and real estate market performed very badly in 2014 that hit employment of a large number of people.    
Unfortunately, the Bangladesh economy started badly in 2015 with conflicting and confrontational political activities that obstruct economic development. Bangladesh is a small country with a huge population whose economy was never strong nor even at par with the emerging countries due to many unresolved factors: political instability, bad governance in public and private sectors, corruption, poor and impoverished infrastructures, interrupted energy supplies and many more. Bangladesh earns huge foreign exchange from manpower export mainly to the Middle Eastern countries and Malaysia. Due to looming political and other problems in the ME countries, especially in Iraq, Libya and Syria, foreign exchange earnings from manpower sector are expected to be lower in 2015.
The export-oriented apparels and textile industries' performance will be painfully affected by the ongoing political turmoil unless and until miracles happen in the political arena. There's no sign of improvement in stock market as the index of the DSE and the CSE is diving every business day. The turnover of real estate is frustrating at the beginning of 2015 and gives a grim signal to this sector.
It is tough to make an accurate forecast on the economies of the world. Many things may happen that can take them up or down. Economists are, however, optimistic about the economies of emerging and developing countries that have had good performance in 2014.
Despite strong economic growth and a falling unemployment rate in the US, gloom in the country's long-term prospects remain ubiquitous. The faster growth in the developing world over the past few years explains why people are comparatively optimistic. Instability in financial and banking sector, political turmoil, corruption, suffocating pollution, and other deepen crises could slow growth in emerging economies.
The people and the economists of both developed and developing world are optimistic about 2015 and optimism is always better than pessimism. The New Year's desire of the majority people of the planet is to have a better world to live in.

The writer is the CFO of a private group of companies.
[email protected]