New Year 2016 - Where the World currently sits

Happy New Year

2016 will arrive in 12 days time and with the new year, where does the world currently stand ?

Economies: the United States economy is recovering from the GFC whereas Europe remains in negative territory with no immediate sign of improvement and a continuing debt problem for Greece. China's economy is slowing to single digit growth rates rather than double digit which has been the yardstick for the past several years. The mining boom is over in Australia and structural adjustment to the new investing environment remain elusive. Despite cutting the cash rate to 2% with a forecast to further cut to 1.5%, there is little sign of increased investing by the business sector. The Reserve Bank of Australia's key tool of economic leverage is therefore something of phantom which only affects housing prices in Sydney and Melbourne but does little to stimulate consumer spending or business investment. Consumer spending is influenced by the overall economic outlook and jobs sentiment.

International relations: the Syrian, Iraqi and Afghan conflicts continue to grind-on with Daesh, al-Qaeda, the Taliban and affiliated groups in Africa and Asia continuing to engage in armed conflict and terrorism. There are few signs, despite various pronouncements and UN Security Council resolution on Syria, of these conflicts ending in the near future. Closer to Australia, tension remains in the South China Sea with the Chinese Government building naval bases on the Spratly Islands, particularly Johnson South Reef and Fiery Cross Reef. This has led to strong diplomatic pressure from the Philippines, Japan and the United States (with some marginal statements from Australia).

Environment: the COP21 Agreement from the Paris Conference for managing climate change and  reducing CO2 emissions to keep temperature rise below 2 degrees C and possibly as low as 1.5 degrees C is high in ambition but short in capability and capacity. Many of the nations who are parties to the Agreement but are also developing industrial powers (India notably) are not, as yet, able to reign-in their energy reliance on the largest contributor, coal fired generators. Even if there was immediate action to remedy the situation the high risk of cascading effects from the existing temperature rise is very real with continuing collapse of ice sheets and permafrost melting across the upper Northern Hemisphere.

So with these large picture challenges in mind, Happy New Year !