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Top 5 things to watch out for

Top 5 things to watch out for

While assessing forecasts for 2016, beware of the «continuity complex ". This is the tendency to believe that this year will be slightly similar to the previous one — just everything is supposed to be in larger volume. Actually, judging by the history of recent years, events that define the year, as a rule, are much unexpected and can suddenly destroy the continuity (let's call them "the black swans" or "the unknown unknowns").

Here are top-5 things to watch out for in 2016:

1. Low prices for commodities: The global trend remains the same. Investors are supposed to show the interest to emerging markets. On the other hand their interest to the developed ones will be much lower. The mentioned prices led to economic difficulties in many countries. We are still able to see some progress India and China, but probably the trend won’t stop.

2. Global GDP growth assessment: Experts worldwide worsened their assessments, in comparison with its previous forecast. The Assessment of global GDP growth in 2015 deteriorated from 2.8% to 2.4%, while the forecast for 2016 from 3.3% to 2.9%, 2017 — from 3.2% to 3.1%. Such adjustments look like a global trend. The promised 2,9% is not the last statement. Does anybody know, what are we going to see next?

3. The worst is just coming - new shocks from China: The main reasons for the pessimism are seen in those developing countries, which until recently were considered successful: "At a time when the recession seems to have exhausted itself, emerging economies began to fade. For many years the management and the reform of growth, which were kindly introduced by the leaders of these countries were totally praised by many observers, analysts and experts. In October 2012, the IMF praised the new "sustainable" economy. But not so long after we have faced another side of the coin”.

4. Oil at $25 is not the limit. Would you like $10?: The price of oil continues to fall because of fears about the state of China's economy. In the first couple of days of January, a barrel of Brent fell by 8%, and WTI — by 9.4%. On the 8th of January Brent ended the day at $33, 55 per barrel; it was the lowest closing price in more than 11 years. And it seems as not the last edge.

5. The outflow of funds from emerging markets: Regarding to this statement, especially interesting is the conclusion which PhD, director of the Moscow Center for Post-Industrial Studies Vladislav Inozemtsev made in his article on He forecasts a significant strengthening of the position of the Western economies: he predicts that the investment returning will support both the US and European economies and will trigger the currency rally.

By Chieffinancing 25.07.2016

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