As 2015 dawns, instability in Russia, stagnation in Europe, and uncertainty in China are being offset by a sharp drop in oil prices that the International Monetary Fund says could boost global economic growth by as much as 0.8 percent above the expected 3.8 percent.
The United States “faces a debt reckoning,” writes Guardian finance and economics editor Heidi Moore. U.S. consumer debt worth $3.2 trillion and the resurgence of subprime lending are both danger signs for an economy that otherwise appears to be on the mend.
Europe too could face trouble in 2015 without major structural reform, argues the Council on Foreign Relations’ Robert Kahn. Growth and investment remain low, unemployment is “sky-high,” and early elections could once again put Greece “on a collision course with the rest of Europe.”
China, which is in the midst of a delicate rebalancing act, will de-emphasize GDP growth in favor of structural, financial, and energy reform, writes the Paulson Institute’s Damien Ma.
Finally, CFR’s Edward Alden foresees that 2015 could see “breakthroughs in global trade liberalization.” U.S.-led trade agreements with both Asia and Europe promise to boost growth, although they face significant obstacles at home and abroad.
Robert Kahn, Council on Foreign Relations: The European Central Bank (ECB) has wielded a monetary-policy bazooka—always on the table, but never fired—that has at times been the only thing standing between Europe and the abyss since the beginning of the financial crisis. ECB President Mario Draghi’s 2012 promise to “do whatever it takes” has restored calm and brought down spreads.