2015 has been a year of some ups and mostly downs in the Economic spectrum. From China’s devaluation of their currency, the yuan, to the Federal Reserve finally hiking interest rates, this is not a year that has been short of monumental events. However, overall, it has to be proclaimed that the majority of economic headlines have been negative, with concerns about the global economy, amidst the August stock market plunge, running rampant. Though some see the 25 basis point hike of interest rates as a signal of confidence in the US economy, these signals have been few and far between. In that vein, let’s hope that 2016 brings more encouraging news about the global economy in general.

Oil has taken a battering like no other in 2015. It seems that, even now, oil prices are hitting new lows every day, sending stock prices to the floor with them. In the past few years, US domestic production of oil has nearly doubled, sending supply skyrocketing and prices dropping. With a renewed global emphasis on climate change (as shown by the Paris deal), demand for oil and other fossil fuels is slowly but surely dropping, with no bottom in sight. Saudi Arabia and OPEC have also not been able to keep their heads down and cut production, leading to a price war between the US and OPEC. From afar, it does not seem that this is going too well for the Saudis, with them and 5 other Gulf states having to introduce VAT for the first time to balance their books. Attempts at diversification have evidently failed, and with Saudi Arabia not really being a booming tourist hub, revenues are falling dramatically. Already, more than $70 billion has been wiped from their Financial reserves.

Regardless of global concerns, it has to be espoused that 2015 was the year of Narendra Modi and India. India became the big country with the fastest economic growth in the world, overtaking their fierce rivals, China. Assuming no horrendous results reported for the second half of this financial year, this status will remain, cementing Modi’s nation as a global superpower. It could be argued that the best news for India was that net foreign direct investment increased again, from $15.8 billion in the first half of the last financial year to $17 billion this year. This is a fantastic signal for the country as a whole, as it means that people the world over are finally seeing India’s gargantuan growth potential, and something worth investing in. One of the main focuses of Narendra Modi, while in power, has been to increase India’s global presence. As such, this news, along with his frequent meetups with leaders such as Vladimir Putin and David Cameron, confirms his targets.

When China devalued the yuan in August, financial markets were sent tumbling. Falls by hundreds of points each day were becoming common, with the moves seeming never ending in their ferocity and negativity. As China moves towards an era of economic stabilisation, economic growth has stalled significantly, coming as a shock to some investors. With Beijing wanting to make the economy more consumer spending driven, rather than export driven, the devaluation could be seen as an indicator that China’s economy is not as strong as once thought. Primarily, weak exports and falling financial reserves were the reasons for the shock move. Chinese policymakers also wanted their currency to become a part of the IMF’s reserve basket, which the renminbi achieved December this year, coming as one of only a few positive signs for China.

The year has not been kind to Greece. In 2015, Greece received its third financial bailout in five years, saving their economy from complete and utter collapse. Against the wishes of the incumbent Greek Prime Minister Alexis Tsipras, the terms of the deal included heightened austerity measures and economic reform. However, the handing over of the $2.3 billion bailout has not been smooth, with some disagreements having prevented the full sum being paid out immediately. To combat the crisis, Tsipras introduced capital controls on the amounts of money one could withdraw from banks. For a short period of time, Greeks could only withdraw €60 each day, indicative of how far the creator of democracy has fallen. Some still believe that a “Grexit” is the way to go for Greece, in which they would leave the Eurozone and reinstate their old currency, the drachma. As yet, however, a Grexit has failed to materialise.

Last but not least, we come to the US central bank (The Federal Reserve)’s hiking of interest rates. The September rates decision was one of the most awaited in financial history, but however, concerns about China meant that the rate hike had to wait another 3 months. The tightening of monetary policy by the Fed happened December this year, sending markets shooting on a rare wave of optimism. They hiked rates for the first time in nearly a decade as nearly all of their economic targets had been met, apart from, primarily, the inflation one. Now, America will turn to the slow but steady process of economic normalisation, with interest rates projected to normalise again in the next few years, leaving the near zero levels which they have held since the 2008 financial crisis. The impacts that this will have on the average American are higher mortgage rates, and a higher rate of return on safe financial investments. It is fair to say that this is the bang that the year of 2015 rightfully should have ended on. Let’s hope that 2016 will be just as eventful, but a bit more economically positive. For now, I wish all my readers a Happy New Year!

Note: This was also posted on my personal blog, check it out!