4 economic trends to look for in 2016
A gradual slowdown and rebalancing of economic activities, manufacturing sector, lower prices for energy and monetary policies sets the economic trend for economic trends in 2016.
Here are 4 economic trends you need to look out for in 2016:
- Recession in the world: The world economy is expected to barely grow in 2016. The International Monetary Fund (IMF) predicts world economic growth of 0.3%, according to its latest survey. The emerging economies are likely to lead the growth with an average 4-4.3% growth in 2016. There could be a gradual improvement of economic growth rates in countries like Brazil, Russia, and some countries in the Middle East, the IMF survey said. Many parts of the world could even see a recession. The slowdown in the Chinese economy and lower commodity prices is likely to continue in 2016.
- India growth story: India is expected to be the fastest growing large economy in 2016, overtaking China. This, however, depends on three key factors – Inflation, growth in industrial production and reform measures by the government. The main worry is about the single-digit growth in corporate profits. The IMF expects India’s growth to be robust, with a slightly faster pace of growth at 7.5%.
- Oil prices: Prices of Brent crude are down nearly 75% since June 2014. Oil was priced at $110 (approximately Rs 7,486.10) per barrel in the first half of 2014. It has now fallen to $28 levels. A key reason for this is the excess production of oil. Demand too has fallen, mainly because of the slowdown in China. The trend of low oil prices is likely to continue in 2016 too. “Futures markets are currently suggesting only modest increases in prices in 2016 and 2017,” the International Monetary Fund (IMF) said in a report. This is good news for an oil importer like India. After all, oil is one of the most important commodities in a growing economy. However, this is bad news for oil exporting countries.
- Inflation: The rise in prices of goods and services in India has been under control for the past many months in India. This could continue in 2016 as well, thanks to the glut in global oil prices. However, worries remain about the difference in inflation in rural and urban India. Moreover, monsoon will play a key role in the inflation scenario. A drought in 2015 led to a faster rise in food prices compared to other goods