A great advantage of predictions is usually that only the author remembers them and then can portentously pull from the hat the one or two which challenged conventional thinking and were proved right. The other bold, but flawed, ideas can be discretely forgotten. So with that premium on shock value, here goes …
Financial opinion, including this newspaper, is visibly breathing a sigh of relief and declaring the corner turned on the eurozone crisis. Mario Draghi is the FT’s Person of the Year and Angela Merkel, one of its Women of the Year. But the fundamentals of southern Europe’s austerity trap and the intractable levels of low growth, unemployment and the social crisis it is creating, are unabated. Greece continues to slip towards ungovernability. Now France looks set to tip economically into the southern European camp. It seems unlikely that Central Bank brinkmanship can hold off economic and political fundamentals indefinitely. The euro remains holed below the water line.
It is hard to argue with the conventional wisdom on the Middle East: It will be a rough year that will trip up President Obama’s much vaunted pivot towards Asia. But beneath the surface of that consensus is even more unpleasant news: the Assad regime in Syria seems to be slipping towards its end but that is likely to lead to more chaos. This is because a military resolution, as opposed to a diplomatic one, will mean a raw and violent power struggle and subsequent period of sectarian retribution. The omens are similarly inauspicious in Iraq and Libya where there seems a high likelihood of increased instability, power struggles and a growing anti-western sentiment.
This is likely to drag the focus of western diplomacy back to the unfinished business of these three struggling countries and away from any renewed concentration on the Israeli- Palestinian conflict or Iran’s nuclear programme. On the latter, those who have declared that one way or another the Iranian nuclear issue would be brought to a head this year may therefore be disappointed.
The IMF has like others jumped on the band wagon of the African growth story noting that ten of the 20 countries in the world likely to have the highest annual growth rates in the next five years are African. It is certainly a more useful lens to look at Africa through than that of poverty and aid failure but it disguises some of the challenges ahead. At least a quarter of Africa’s growth will come directly from energy and minerals and a lot more still from their impact on other sectors. Across the continent, governments and those decent oil and mineral companies with a long term mindset are struggling to contain the dangers of corruption. This resource boom could make, or unmake, the continent.
Across Asia, the economic revolution of recent decades is beginning to turn on its own children. Demographic pressures are fanning old border disputes. Internal income inequalities are exploding leading to widespread social protest. Consumer and dietary changes along with urban growth are aggravating water and food scarcities. The propensity for a natural disasters is growing along with that for man made conflicts.
In Latin America, Hugo Chavez may be on the way out but Chavismo is doing better than Washington commentators hoped. From his Cuban hospital bed he has just won provincial elections. Narcotics and inequality are still undermining the dream of many both in the continent and its US neighbour for a more stable middle class and democratic politics.
Let’s hope these predictions are wrong enough to be soon forgotten by all but their author. In which case may I wish the FT’s readers a Happy and Prosperous New Year.
The writer is chairman of global affairs at FTI Consulting and author of ‘The Unfinished Global Revolution’. He is a former UN deputy secretary-general and vice-chairman of the World Economic Forum