If you thought 2015 was rocky …
January 2, 2016, 5:00 pm

What stories will make the headlines in 2016? [Xinhua]

But 2016 promises to be equally … ahem, exciting.

In the Middle East, the choke-hold on the Islamic State of Iraq and the Levant appears to be tightening. Russia, France and others continue to pummel the Islamist extremist group in Syria while the Iraqi military now turns its eyes on liberating Mosul, the country’s second largest city with a civilian population of more than a million.

In neighboring Iran, it’s a new year soon free of UN sanctions, chances for a revitalized economy and about one million additional barrels of oil pumped into international markets. The war drums of last year are silent. At least for now.

Oil markets are anything but. In November, the UAE minister of energy predicted that oil prices would bounce back in 2016. Global investment firm Goldman Sachs says the opposite because of warmer-than-normal winters in North America and Europe, overstocking of oil reserves, and lower demand.

It predicts oil prices could fall to $25 a barrel by the second quarter of 2016. Others say the prices could go lower.

In the meantime, Asian giants (by merit of their appetite, at least) China and India have been counting their blessings as they are among the world’s greatest energy markets

China, the world’s second largest economy, is struggling to keep its economy growing between six and seven per cent in 2016.

Manufacturing data has been disappointing for five consecutive months while the services sector looks like it is set for further growth in 2016.

Expect the Chinese leadership to preempt any further decline by keeping fiscal policy accommodative, likely further cutting interest rates, intervening as it did last August and boost public spending.

We await a full economic report on January 19.

India, on the other hand, is moving forward at an incredible pace; it’s on track to register GDP growth of as much as 7.5 per cent in 2016.

The government of Prime Minister Narendra Modi appears determined to continue reforms to open up local markets and make it easy for foreign investors to do business in India.

One of India’s targets in 2016 – in addition to trying to reform the World Trade Organization – will be the domestic goods and services tax, yet to be launched, and how to deal with the huge deficit.

Speaking of global trade, the BRICS New Development Bank is already in operation and will be making its first loans (in yuan, no less) in April.

NDB President KV Kamath has pledged that emerging market economies can expect to have projects approved and implemented quickly following the application of prudential lending criteria.

The importance of the NDB’s first loan can’t be overstated; it looks to usher a new world banking paradigm.

Dilma and the Olympics

President Dilma Rousseff’s popularity helped her get reelected in 2014 but can the worst economic crisis in Brazil’s history – and a stubborn corruption scandal – be her undoing? [Xinhua]

The Brazilian economy, which was dragged into free fall in 2014 and became cataclysmic in 2015, is the biggest story of 2016 for the country. No, not even the 2016 Summer Olympics in Rio (kicking off in August) will overshadow the turbulence the local economy faces.

The Olympics come just two years after the Brazil World Cup, considered by many to have been one of the most successful football tournaments in decades.

President Dilma Rousseff has tried a number of reforms, tightening of public spending, implementing unpopular austerity reforms – nothing seems to work.

The benchmark SELIC interest rate was raised to over 13 per cent in April 2015 and by July had risen again to 14.25 per cent, the highest in nine years.

Unemployment is 7.9 per cent; inflation is nearing 11 per cent – the government target is 4.5 per cent.

“For Brazil to grow, it will have to carry out a vigorous reform agenda that increases productivity and competitiveness and encourages investment,” writes Arbache.

But Brazil is also plagued by a corruption scandal linked to its industry powerhouse – Petrobras, and calls for her impeachment, which have stubbornly not gone away.

Will Rousseff survive through the year?

The Fed … again, and again

Up north in Washington, global markets will watch the US Federal Reserve to see just how slow interest rates will go up.

In December, the Fed announced it would up interest rates for the first time in nearly a decade, a sign that the US economy has come out on top after the sub-prime mortgage crisis of 2007-08.

But the Fed is wary of global turbulence; in September, it postponed the aforementioned announcement as it monitored how quickly Chinese markets were “corrected”.

Emerging markets, which stand to lose the most as increased interest rates lead to FDI capital outflow, are somewhat relieved that the Fed won’t rush to raising interest rates.

Emerging markets are hoping that currency devaluation will be reversed as they try to lure foreign investors back in 2016.

The US economy may be doing better – some argue that President Barack Obama’s policies played a role – but for the time being it’s not really the focus of this year’s presidential election.

US media appears more about Republican hopeful Donald Trump and his eccentricities than, say, America’s Trans-Pacific Partnership (TPP).

The White House announced a “breakthrough” in negotiations for the TPP, one of the key free trade agreements for the Asia-Pacific region, where trade would be reportedly “liberalized” in 40 per cent of the world economy.

Negotiated between the US and 11 Pacific region countries, the deal – if approved – would cut trade barriers and set common standards from Vietnam to Canada.

The deal, however, faces a lot of skepticism and doubt from lawmakers in the TPP countries and has yet to pass through a Congressional vote.

It hasn’t figured prominently in the race for the White House, but this could change in 2016.

Trump versus Hillary Clinton in November 2016? Perhaps.

Remember the refugees

Nearly a million refugees reached Greek and Italian shores this year alone, the UNHCR said [Xinhua]

Despite the tragic scenes captured by camera lenses, the conflicts that bred this mass flux of humanity continue to dominate headlines in the Middle East.

War, strife, hunger, terrorism, and desperation are the unfortunate ways of life for millions in Nigeria, Somalia, Libya, South Sudan, Yemen, Syria, Iraq, Palestine and Afghanistan.

The United Nations High Commissioner for Refugees (UNHCR) says that “2015 is likely to exceed all previous records for global forced displacement”.

The global response, while well-intentioned, has in some cases been … incontiguous, and there has been a backlash in some east European countries against the influx of refugees.

“Many of the solutions to these problems do not lie in Europe, or even within Europe’s power, and again, the public, via social media is already asking the questions that many of their politicians have been avoiding for years. Fingers are pointing at the wider international community, especially the Gulf States and America, as well as highlighting the impotence of the United Nations,” writes commentator Russell Merryman.

In the meantime, European nations will be looking to boost their border security as well as increase intelligence and surveillance to ensure that a Paris-style attack inspired by ISIL never recur.

But what the global community will hope does recur is the spirit and commitment to respect the tenets of the Paris 2015 COP21 Climate Change conference. Will nations begin implementing much needed changes to their carbon emissions in 2016?

Summits and alliances

The future of Syrian President Bashar Al Assad will come into focus in 2016 as international efforts to end the conflict there intensify.

The future of Britain in the European Union will also be a hot news item as we move forward in 2016.

And we’ll also be monitoring North Korea’s New Year Resolution that it is ready for war.

In February, India assumes the chairmanship of the BRICS Summit. The meeting of BRICS leaders will be held in New Delhi this summer.

There will be a number of important elections in South Africa and Tunisia, Philippines and Taiwan, Austria, Germany and Russia, to name a few.

China will also for the first time host the G20 summit on September 4.

In 2016, we’re less likely to see the kind of violence that marked 2014 and 2015 and more of an economic conflict between Kiev and Moscow over debt nonpayment ad likely Russian tariffs as an Ukraine-EU trade deal goes into effect.

Russia is already in an economic war with NATO member Turkey following the downing of a Russian SU-24 in Syrian airspace in November. On January 1, Russian President Vladimir Putin said NATO expansion was a threat to his country’s security.

In the Eurozone, markets will watch to see if the European Central Bank will take any further measures to strengthen its quantitative easing stimulus program.

The eurozone economy stumbled through 2015 with even Germany facing challenges; there is little to suggest this won’t be the case in 2016, too.

There will be little change in Eurozone GDP growth, now steady at 1.6 per cent.

These are just some of the stories we’ll be following at The BRICS Post this year.

Strap in.

By Firas Al-Atraqchi for The BRICS Post