It is still early in the year and this is the time to make some predictions about what might happen in 2016 on markets.
In the ending of 2015 we have heard rumors on the ‘crumble’ of the Chinese economy or the oil market possible collapse. But we saw at the beginning of 2016 that none of the two things really happened. The Chinese economy is not in crisis, but it is facing a slowdown of its growth rate and the oil producers resist more than expected.
Then, what should we really expect in 2016?
I would say that the overall performance of the economy in 2016 will not be certainly negative, but never forget the financial crisis that we leave behind so do not aspect major growth or development rates.
The International Monetary Fund, although, is confident and announced a growth of 3,4% for global economic.
I believe that politics will have greater importance on the movements of the markets in 2016. The elections in the United States will guide the main drivers in the second half of 2016 and this will affect more the euro-dollar exchange rate.
The UK referendum is also scheduled this year, in addition to the continuation of the immigration crisis in Europe, the unpredictability of Russia and the possibility of new attacks by ISIS.
Europe is expected to grow at a moderate pace in 2016, less than 2%. It is not fancy, but if we consider that the European economy has been one of the most severely affected by the crisis, that its population is not growing and that a large amount of resources has been spent to save the countries most in need, an expected increase of 1.9% of its GDP, seems good.
It is planned another expansion for the United States but the rate seems to be the same, between 2% and 3%. In the meantime, Washington keeps talking about the ‘big recovery’ of 2017.
Probably there will be a rise in the US dollar and a change of monetary policy of the Federal Reserve. The US Central Bank is expected to rise the interest rate four times in 2016, which will have consequences on the Forex market, on shares and commodities.
It will not reach the same levels of the United States, but also Canada will bode well.
Forecasts on the Asian continent are the most difficult to do. The conditions of the Chinese economy are still unknown, also thanks to doubts about the veracity of the data published by Chinese institutions.
According to the Communist Party, China will grow at a lower rate of 7% and it will implement reforms to make its market more efficient and stable. It is also true that China must necessarily have a reasonable rate of growth to stay afloat so the world’s powerful economy can ride the wave of investors optimism.
Uncertainty about Japan is due to unconvincing data published at the end of the year. The country of the rising sun is in recession, the unemployment rate is stable but the BoJ recently lowered the interest rate to devalue the yen.
As for emerging markets, signs of stabilization in Russia and Brazil will be translated into a better year for the BRICs whose growth will be marginally higher than that of the advanced economies.