Market swings have become the norm as 2015 draws to a close. But this has not stopped us from indulging in some forecasting for a year ahead that promises to surprise investors and companies alike – such as the UK exiting the EU and oil reaching $100 again.
Will 2016 be marked by rising interest rates, a wallowing oil price and a full-on recovery in Dubai’s property market? Experts, commentators and analysts join The National’s business team in our special look ahead at what the next 12 months might bring in financial and economic terms. A mix of the plausible, the unlikely and the downright humorous below:
Sustainability a priority
“In light of the major social, economic and political challenges that our world experienced in 2015, particularly across large parts of the Middle East and North Africa, I sincerely hope that 2016 will be the year in which achieving more inclusive and sustainable growth becomes an overriding and urgent priority for businesses, non-profits and governments alike.”
Badr Jafar, the chief executive of Crescent Enterprises and the founder of the Pearl Initiative
Britain leaves the EU
“David Cameron will call a referendum in the autumn and Britain will vote narrowly for Brexit, forcing him to resign.”
Ivan Fallon, the author of Black Horse Ride: The Inside Story of Lloyds and the Banking Crisis, and the former business editor of The Sunday Times
Bankruptcies
“1. A major energy-sector bankruptcy or restructuring. 2. Another GCC country beside the UAE goes big in solar.”
Robin Mills, the head of consulting at Manaar Energy and the author of The Myth of the Oil Crisis
Year of living on edge
“Anxiety and worries about the economic outlook and financial landscape both in the UAE and globally will rise but events will not unfold as feared allowing optimism to grow into 2017.”
Mustafa Alrawi, The National’s Business Editor
Commodity weakness
“With most of the developing world in an economic slowdown, IHS is forecasting prolonged weakness in commodity prices over the next decade. Prices for coal, iron ore and crude oil are all likely to remain depressed for the next few years.”
From business-info group IHS’s report on top trends that will affect maritime trade in 2016
Internet spreads
“A key facet of the digital transformation revolution that is beginning to take shape in the region is the emergence of the Internet of Things (IoT) ecosystem, with IDC predicting that IoT-related investments in [the Middle East, Turkey and Africa] will create a market opportunity of US$7.03 billion in 2016.”
From the tech consultancy IDC’s FutureScape Predictions for the year ahead
Internet will get greener
“The internet will get greener in 2016, even as the number of global internet users reaches 50 per cent of the world’s population. This continuous expansion of our digital lives requires massive amounts of electricity, particularly for the data centres that serve as catalysts of the digital economy. Operators of data centre know that has consequences in a fossil fuels-based economy, with 84 per cent of North American operators recently recognising a need to consider renewable energy for meeting future energy demands.
“In 2016, we’ll see more enterprises adopt renewable energy principles. Companies that rely on electricity to supply power to critical internet infrastructure and maintain operational reliability will continue to reevaluate the energy efficiency of their data centres, adopt proven energy-saving techniques and evolve sustainability best practices.”
Tony Bishop, VP Global Enterprise Strategy and Marketing, Equinix
To peg or not to peg
“A depeg of the Saudi riyal is our number one Black Swan event for the global oil market in 2016, a highly unlikely but highly impactful risk.” Bank ofAmerica strategists led by Francisco Blanch wrote in a November 19 report. “It is a lot easier politically to implement a modest supply cut at first than allow for a full-blown currency devaluation.”
Bank of America looks for the outlier
Dubai property price fall
“Cluttons said that although the rate of house price declines is slowing, the amount of new stock coming on to the market continues to grow. Therefore, it expects prices to continue to fall by 3 to 5 per cent next year.”
From a November 25 report in our pages on Cluttons’ outlook for the Dubai property market in 2016
Cybercrime on the rise
“2016 will also see more players entering the world of cybercrime. The profitability of cyberattacks is indisputable and more people want a share of the spoils. As mercenaries enter the game, an elaborate outsourcing industry has risen to meet the demands for new malware and even entire operations. The latter gives rise to a new scheme of Access-as-a-Service, offering up access to already hacked targets to the highest bidder.”
Juan Andrés Guerrero-Saade, a senior security expert at the cybersecurity company Kaspersky Lab.
Choppy seas
“The choppy seas we foresaw in 2015 are likely to get choppier in 2016 … We forecast Japan GDP growth to slow further to 5.7 per cent in 2016. That would be its slowest pace since 1998, heightening the already non-trivial risk of credit crunches.”
Nomura’s chief economist for Asia ex-Japan Rob Subbaraman and his team weigh in on Asia
Stronger but not strong
“The world economy next year is shaping up to be stronger than in 2015 and roughly in line with long-term growth averages, according to the IMF and economists surveyed by Bloomberg. But “a return to robust and synchronised global expansion remains elusive”, the fund said in its October outlook.”
From Bloomberg Businessweek’s cover story on the year ahead
It will all work out
“OK-ish”
From that same Bloomberg story, Adair Turner, former chairman of the UK Financial Services Authority, boils the 2016 outlook down to its essence
Up and down year for oil
“Crude oil will trade both below $30 a barrel and above $60 in 2016.”
“Logic and momentum suggest the first part of this bet is a no-brainer, with both Brent and WTI crude already having tested below $35 a barrel. The second part relies on history repeating itself insofar as when the bottom is reached, the rebound tends to be rapid.”
Clyde Russell, Reuters commodities columnist
US bound for recession
“A repeat of 2008-9. Oil climbs back to $150 and US enters recession and its banking system is once again on the brink of a collapse.”
Srinivasan Iyer, assistant business editor, The National
Bitcoin is back
The price of bitcoin could rise by 50 per cent next year from where it is now, it hit $500 in November, when the mining reward is halved – it is designed to be halved roughly every four years, to keep a lid on inflation, according to Daniel Masters, co-founder of Jersey-based Global Advisors’ multimillion dollar bitcoin hedge fund. “If Opec came out tomorrow and said, ‘in six months’ time we’re going to halve oil production’, the oil price would instantaneously react. But the bitcoin market is still in its infancy, and I don’t think that factor is discounted into the price fully,” he told Reuters in December.
Stay with equities
“While the new year tends to be a popular time to make changes, we believe that current economic climate will remain unchanged during Q1 2016, which supports our view that portfolios should continue to focus more on equities and away from the overpriced bond market.”
Commenting on its Q1 2016 Compass report, Vic Malik, the head of Global Investments and Solutions for Mena at Barclays Wealth and Investment Management
US dollar volatility
“There are reasons for optimism and also caution as we look to the year ahead. Volatility on the dollar will increase for the first half of the year, as nearly all Fed meetings will be seen as ‘live’ for the possibility of a rate increase. Dealing with such interest rate policy uncertainty on the dollar is something the market has not had to consider for seven years.
“Investors will have to learn new skills to deal with this. It will be a good year for the dollar, but it won’t be a runaway year as the Fed will struggle to deliver the four interest rate increases the Federal Open Market Committee had in their projections.”
Simon Smith, the chief economist at FXPro
Wishful thinking
“After North Korean hackers obliterate the internet, the world’s newspapers enjoy profits on a scale not seen since Gutenberg was in little leather diapers. Raises, however, are not forthcoming.”
Rob McKenzie, assistant business editor, The National
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