One thing is for sure – in today’s increasingly volatile and uncertain trading environment, reflections on 2014’s performance are unlikely to help anyone pick sure-fire winners for 2015.
But, as in the spirit of the media’s endless pre-occupation with the films, TV programmes, games, books, sporting achievements and personalities of the year, it’s the kind of thing that one is supposed to do at this time of year. But please do forgive me if my approach is exclusively macro-economic – sadly, I lack the financial qualifications needed to provide investment advice.
First off, the biggest loser. While it is tempting to point the finger at the eurozone, and indeed the economy of the whole of Europe, there may be reasons not to do so. For, while even Germany has been flirting with the spectre of a double-dip recession, signs of recovery in markets like Spain and even Greece suggest that the light at the end of the tunnel may be more than another train coming.
Another candidate is gold, but its fall in value of just 1.8% during the year is modest by comparison with, say, the over 20% collapse in the crude oil price during the few weeks between 10 November and 8 December 2014.
And then there is Japan, the world’s second largest developed economy, which only yesterday (8 December) admitted that its latest recession is even deeper than initially estimated. For that reason, and the hangover of the so-called “lost two decades” (1990-2010) which barely saw the country emerge from recession, Japan receives the biggest loser award.
Turning to the positive side of the equation, I see only two real candidates for the winner of 2014. First, the US economy. This might seem a surprising choice just a couple of days after China officially overtook it in terms of sheer size.
The reality is, though, that US growth is strengthening while China’s, albeit still immensely rapid by Western standards, is at its weakest since the global economic crisis. It is, in fact, in danger of missing official targets for the first time in 15 years.
Critically too, US annual economic output per capita stands at over $50,000. Even allowing for price differences, that figure stands at just $5,000 in China.
My other candidate is the UK economy. We all know the financial management challenges it faces, from ongoing austerity cuts, to wages growing more slowly than inflation and consumer credit providing a fragile foundation for growth.
And yet there is no denying the fact that right now, UK growth is faster than that of any other G7 country. Unemployment is still falling. Inflation is going down. And British companies are successfully exporting the fruits of their talent across the globe.
Indeed, the challenge for the UK has been all the greater given the weakness of some of its main export markets, from Germany to Japan. And yet, this is a challenge that so far is being met and overcome.
Even for professional economists, it is often extremely difficult to separate fact from fiction, spin from substance and optimism from dispassionate reason. But there is no doubting the immense strides that UK business has made in recent years to drag the country out of recession and start to outperform its international competitors.
Much of this success is due, I believe, to a new determination by financial management professionals to analyse opportunities with increasingly granular precision before making decisions of any significance.
In particular, with wounds still raw from the financial crisis, financial managers are more disciplined than ever before about properly researching the status and trading record of every organisation they work with, right across the world.
The services of a reputable credit reference agency are key to this, adding a “scientific” level of analysis to companies’ trading decisions. And in a global market, this is as much about the state of the nation’s health as that of individual companies.
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