As we usher in the New Year, it’s worth taking a moment to see how this year’s major business themes have played out. While smatterings of growth and dips in unemployment have brought relative stability to Europe and the US, analysts at Nomura foresee policy changes that may reshape global prosperity in the longterm:
The next five years has to be about a rebalancing towards the ‘real economy’ and the bottom 90 percent, at the expense of the top 10 percent. This shift in policy emphasis will not be a happy time for financial markets and speculators, but in the long term it will be seen as a major positive event.
The standoff in Washington over federal spending and the debt limit led to a 16-day federal government shutdown in October and brought the US close to a potential default. A last-minute deal put off the next fiscal fight until early next year, but as Econ-Matters explains, none of the options are appealing.
To avoid the recurring debt ceiling showdown, Washington has to address how to cut federal spending and/or increase revenues. Unfortunately, any federal revenue increase will involve some kind of tax increase mostly to the middleincome class. And cutting the federal spending seems to be in the constant mode of one step forward, two steps back.
Emerging markets, aside from China, posted subpar results in 2013, yet their joint input toward the global GDP is substantial. As Business Insider notes, by adding another group of countries to the mix an impressive picture begins to take shape:
The slowdown in the BRIC economies is for real, but since the end of 2010, their combined GDP has still risen by around $3.5 trillion; nearly equivalent to Germany’s economy. Taking them collectively, they total more than $15 trillion, creeping closer to the size of the US economy. Throw in the MINTs and a couple of others and you get up to $20 trillion quite easily. With uncertainty always a constant around global markets, technology and innovation continue to pave the way. Research firm Canalys predicts tablets to make up 50%, or 285 million units, of the computer market next year, jumping to nearly 400 million by 2017. Familiar faces will continue to be at the forefront, thanks in part to the user experience they’ve created though Google Play and the App Store.
Although Apple has lost its dominance in the tablet market it practically invented, it nonetheless maintains the edge in profitability from the devices. Apple is one of the few companies making money from the tablet boom. Premium products attract high value consumers. And for Apple, remaining highly profitable and driving revenue from its entire ecosystem is of greater importance than market share.
In an effort to streamline its services and device production, Microsoft snapped up struggling handset maker Nokia who had been heading down a rocky path in recent years. As Forbes magazine explains, it’s a win-win for both parties:
Nokia has lost about 90% of its market share in the last 10 years and its mobile device business is now about to be absorbed into Microsoft. Nokia is getting a second chance at life and instead of lurching toward bankruptcy and running out of cash, it now gets the chance to reinvent itself with a big fat wallet to build or buy whatever it wants.
Merging fashion with technology will continue in the year ahead as more day-to-day products are fitted with smart technology. Though consumers remain wary of wearable technology, a future full of smartphone-connected watches and futuristic Google Glasses appears to be on the horizon. As technology expert Paul Saffo tells ABC, Samsung and Apple are banking on consumers hoping to stay ahead of the curve:
This is still the world of early adopters, and an early adopter is someone who pays too much money for something that doesn’t quite work. It’s a safe bet that the Apple device is going to be much more cool and elegant and probably pretty close to a fashion statement.
For most, January 1st is a time to turn over a new leaf. Whatever happens in 2014, the general consensus is that things are certainly moving in a positive direction, much different from previous years. As Business Insider concludes, we may finally be out of the woods:
The euro-area is still a work in progress, China presents meaningful question marks, Congressional gridlock in the US could still throw sand in the federal fiscal wheels and geopolitics can always surprise. But, enough progress has been made that all of these issues seem less threatening today than 12 months ago.
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