Three words have dominated the first quarter of 2016: they’ve dictated economic policy across the world, and every ill has been laid at their door. As you can probably guess, the three words are ‘slowdown in China.’
The slowdown – and we’ve dealt with the figures in the Far East section below – has given rise to a series of warnings on the state on the global economy. The World Bank kicked us off in January, warning of ‘slow global growth.’ In February it was the turn of the Organisation for Economic Co-operation and Development (OECD), as they cut their forecast for global growth in 2016 from 3.3% to 3% and called for “urgent action” to tackle slowing growth.
Finally, March saw the International Monetary Fund step up to the microphone. Second in command David Lipton warned that the world faced “economic derailment” and called for – you guessed it – steps to be taken. “We are clearly at a delicate juncture,” he said, in a delicate IMF understatement. While this was going on, the World Economic Forum came and went in Davos. The great and good paid £290 for bottles of Cheval Blanc and then listened to Leonardo di Caprio savage corporate greed. Sadly, they failed to take ‘urgent action’ or any steps at all towards solving the global slowdown.
January also saw North Korea claiming a successful hydrogen bomb test. But it was the continuing slump in commodity prices – especially the price of oil – which really set nerves jangling around the world’s stock markets. There was only one way that markets could move in January, and all the major world indices were down in the month. China led the way, with the always-volatile Shanghai Composite index down by 23% in a month.
It took until March for markets to move in the opposite direction, finally calmed by remarks from Janet Yellen, Chairman of the US Federal Reserve Bank, that the US would now “proceed cautiously” with regard to any future interest rate rises.
While all this was going on, David Cameron returned to the UK from negotiations in Brussels. He may not have been waving Neville Chamberlain’s ‘piece of paper’ but he was certainly claiming victory in his negotiations with the EU, and recommending that Britain vote ‘Remain’ on June 23rd. Two prominent Conservatives – Boris Johnson and Michael Gove – promptly abandoned ship in favour of ‘Leave’ as the two sides lined up for four months of reasoned, logical debate. Or name-calling and scaremongering…
