Tuesday, 31 December 2013

Economic predictions for 2014

Time now to engage in crystal-ball gazing and make public my macroeconomic predictions* for 2014. Given that I was too cautious 12 months ago about the prospects for 2013... I will continue to be so into next year. Optimism bias can be more dangerous than erring on the side of caution, whether you are planning a national budget or a personal one. This time last year, JP Morgan forecast that 2013 would be the first post-crisis year; I begged to differ. JP Morgan was right, I was wrong (although much of the eurozone has continued to shrink).

Poland, then, will continue to see economic growth accelerating, though not enough to make a major dent on the unemployment figures nor to create dangerous inflationary pressure.

Key economic indicators: Poland

2013 (latest data) 2014 (same time this year)
GDP growth 1.9% (Q3 y-o-y)
3.1% (Q3 y-o-y)

Unemployment 13.2% (Nov)
11.0% (Nov)

Inflation 0.6% (Nov)
2.4% (Nov)

I cannot see any great appetite on the part of the Polish government to fix things that are not working too well, rather I predict continued small improvements in the way government works brought about by generation shift. This has been happening at the micro level, but there's still a long way to go before Poland's bureaucrats become civil servants and serve the nation accordingly. Neither left nor right, liberal or statist, can campaign on a platform of poor-quality public services, so let's see the quality of government - and governance - improve further in 2014.

Turning to the UK, its bounce-back has been one of the surprises of 2013. Let us hope that the impetus behind this renewed economic vigour proves to be sustainable, and not just the result of a bubble in one asset class - residential property in South East England. In particular, I'd very much like to see a manufacturing renaissance - George Osborne's 'march of the makers'.

Key economic indicators: UK

2013 (latest data) 2014 (same time this year)
GDP growth 1.5% (Q3, y-o-y)
-0.3% (Q3 y-o-y)

Unemployment 7.6% (Aug for Q2)
6.8% (Aug for Q2)

Inflation 2.1% (Nov)
3.5% (Nov)

The eurozone - increased tomorrow by tiny Latvia - will continue to perform erratically with a soft south and resurgent north. All in all, it will balance out into a positive picture (just), though structural problems will continue largely unresolved in Italy, Spain and Greece. Two years ago, Greece was on the verge of leaving the eurozone - tomorrow it will expand to 18 countries, four of which were once part of the communist bloc (indeed, two were part of the USSR).

Key economic indicators: Eurozone

2013 (latest data) 2014 (same time this year)
GDP growth -0.4% (Q3)
0.8% (Q3)

Unemployment 12.1% (Oct)
10.0% (Oct)

Inflation 0.9% (Nov)
1.8% (Nov)

The zloty continued to demonstrate remarkably stable in 2013. Against the pound, it moved from 5.00 this time last year to 4.98.  Against the euro, the Polish currency it moved from 4.10 to 4.14). The euro to the pound also remained stable this year (from 1.22 to 1.20).

And currencies - on 31 December 2014, barring any major shocks such as Scotland voting to leave the United Kingdom, I predict 1 GBP will be 5.10 PLN, 1 EUR will be 4.25 PLN, and 1 GBP will be 1.20 EUR.

Weatherwise - I predict the weather globally and here in Poland will continue to get stranger and stranger. Here we are - December2013  in Warsaw - and there's only been one day of snowfall... Can't remember that happening before.

* I wrote "macroeconomic predictions" here on purpose. Interestingly, Google's Blogger underlined the word with a green squiggle, helpfully suggesting that I change the word 'predictions' to 'projections'. Thanks Google - but these are mere predictions. Another one is that Google will get cleverer and cleverer (Google Translate is learning to get better each year).

This time last year:
Economic predictions for 2013

This time two years ago:
Economic predictions for 2012

This time three years ago:
Classic cars, West Ealing

This time four years ago:
Jeziorki 2009, another view

This time five years ago:
Jeziorki 2008, another view

This time six years ago:
Final thoughts for 2007

1 comment:

Wilkbury said...

I think I know what happened to "our" snow...

Happy New Year!