Business Environment

Five years after the Great Recession, the global economy is in dispiriting shape. But 2015 holds hope of improvement. Developing countries will rediscover some missing momentum, to expand by 5.3%; rich-world nations, too, will speed up to 2.5% growth, thanks largely to a revitalised US.

The era of easy money unleashed by the US Federal Reserve’s bond-buying programme will be over. Firms will watch keenly for signs of an American interest-rate rise: The Economist Intelligence Unit expects a first increase around mid-year. This will lure capital back to America, carrying risks for emerging markets. By and large, though, investors will find ample reason to chase still-high yields in the developing world. The biggest hazards for the global economy will lurk in debt-ridden Europe, where deflation will be a risk.

China sits at the other extreme: GDP growth of 7% will help sustain trading partners in Asia and elsewhere. But Chinese authorities will be caught in a difficult balancing act: restraining an indebted financial sector while keeping growth strong. The risk of a misstep is real. World trade will increase by 5%, and China’s yuan will be used more frequently in trade finance. The global trade picture will brighten further if Pacific Rim countries and, separately, Europe, sign free-trade pacts with the US; both are just conceivable in 2015.