The global economy had seen continuous slide in oil price in the international market in 2015. Political tumults in different countries also took a heavy toll. Bangladesh, the most populous country in the world, had to face in the early months of 2015 lots of political instability that hurt the economy severely. The economy is still crawling with the wounds it suffered during the last few years. Thanks to resilience of the people, the statecraft, after a long time, has started to see a peaceful environment at least at the beginning of the year 2016. Politicians run the country. Their decisions matter most for development, peace and progress of any country. The continuous political onslaughts in the Middle East and some African countries, the war-like situation prevailing in different countries in 2016 and oil price nosedive simply hint at looming global economic uncertainties. Developing and underdeveloped countries and the oil-rich states are expected to face the consequences of economic recession, sluggishness and melt-down. Budget deficits and cuts would be normal phenomena for oil-rich economies unless a U-turn takes place in oil price. Glooms and booms are expected to happen to economies of many countries in 2016. 2015 saw some economies rejuvenated while others-particularly emerging and developing ones-were squeezed by tumbling commodity prices and fragile financial conditions. Wealth inequality between the richest and the poorest was very high in 2015. Economists and analysts are always busy with forecasting of the world economy in the New Year. So what happens if the year 2016 starts with more than a temporary quiver? Is it going to be more quantitative easing? Negative interest rates? What will happen to falling oil prices? Nobody really knows what will happen. Some economists have termed the time as uncertain. Christine Lagarde, Managing Director of the International Monetary Fund (IMF) forecast last week, the global economy would remain fluid in 2016. She said there is likely to be an increased divergence in monetary policies in developed economies. The IMF thinks the Bank of Japan and the European Central Bank will be providing extra strength at a time when the US Federal Reserve and the Bank of England are pushing up interest rates. In the past, this was a recipe for triggering trouble in the markets. It is predicted that China’s attempt to rebalance its economy towards consumer spending rather than its exports would prove a bouncy rather than a trouble-free one: the transition was leading to lower demand for commodities with knock-on effects for those countries producing oil and industrial metals. Burdens on goods and services producers are already palpable. Russia and Brazil are in recession; Saudi Arabia has announced a very conservative budget and is planning to sell a stake of its state-owned oil company Aramco. If the Saudis are continuously feeling hurt due to an oil price that fell from US $115 a barrel in August 2014 to US $33 a barrel on January 8 2015, other countries in developing and emerging world are probably getting close to breaking points and may face really a critical situation. Richest one per cent will own more than all the rest will have by 2016, as predicted by some economists. Extreme inequality isn’t just a wrong ethically; it obstructs economic growth and threatens the private sector’s bottom line. The combined wealth of the richest 1 per cent will overtake that of the other 99 per cent of people in the year 2016 unless the current trend of rising inequality is checked, balanced and contained. The explosion in inequality will hold back the fight against global poverty in 2016 at a time when 1 in 9 people doesn’t have enough to eat, to have shelter, education and good healthcare and when a billion people live on less than US$ 1.25 per day. The high inequality may cause political instability, conflicts and social unrest in developing and underdeveloped economies in 2016 and onwards. In 2015, world leaders ranging from the US President, the UN Secretary General to the Managing Director of the IMF, talked more on different events about tackling poverty and extreme inequality. But the scenario remains unchanged. The scale of global inequality is simply alarming and despite the issues shooting up the global agenda, the fissure between the richest and the rest is widening at a faster rate. Will 2016 be the year of political turmoil? Weak economic activity and low productivity growth mean that real wages and consumption are likely to continue to be disappointing. When realities are coming short of expectations, there are grievances to be exploited. Economists and international organisations have forecast that developed and developing economies in 2016 might see lesser growth in GDP. A number of factors are set to trigger discontent. Job security is undermined by global competition, digitalisation and robotisation. New work opportunities ahead are more likely to be short-term contracts, part-time jobs and self-employment without full social benefits and full job security. The global insecurity due to never-ending conflicts, fighting and racism in the Middle Eastern countries especially in Syria, Yemen, Iraq and Libya may extend the war-like situation to other regions. The refugee exodus is considered to be the most terrible crisis in recent times. The refugee crisis has already shaken the world economy and created economic pressure on many EU countries. The refugee crises in Europe will remain a major factor during 2016. The UN estimates that over one million people entered Europe seeking asylum during 2015. On a global level, the UNHCR has estimated that the number of displaced people reached almost 60 million in 2015, an increase of some 40 per cent since 2014. In 2016, the number may increase since the crisis is getting worse. The failure of leaders of the super-powers and the United Nations to solve the long-time conflicts and war in Syria and Iraq, either politically or by use of force, has started taking its toll on the world economy including the economies of super-power countries. It is forecast that the refugee crisis will worsen further in 2016 unless the world leaders and the UN take effective and collective actions against the regimes which are responsible for it. The world leaders must work with honesty and sincerity and with the aim to solve the problem instead of lingering the crisis. Failure to do so will send the booming economies of the super-power countries to gloom within a short span of time. Climate change is seen as the biggest menace to the global economy in 2016, according to a survey of 750 experts conducted by the World Economic Forum (WEF). The annual assessment of risks conducted by the WEF before its annual meeting in Davos on January 20-23 showed that global warming has catapulted its way to the top of the list of concerns. A failure of climate change mitigation and adaptation is seen more likely to have major and unpredictable impacts than the spread of weapons of mass destruction, water crises, mass involuntary migration and a severe energy price shock. India has projected foreign direct investment (FDI) to rise by 45 per cent in 2016, helped by policies introduced in November, policymakers said. The announcement follows the government’s ongoing efforts to reduce red tape and bolster investor confidence in Asia’s third largest economy. India’s economy is expected to be stronger in 2016 due to enhanced flow of FDI. India is ranked the fifth in FDI inflows after China, the US, the UK and Mexico. Also being an oil importing country, it will capitalise economic benefits from falling oil prices. Bangladesh, due to its geographical location, will face the shockwaves of global climate change and global warming in 2016 and its economy will be devastatingly affected by cyclones, tornadoes, floods and tidal bores unless fast-track action plans including plantation of more trees throughout the country, stopping deforestation, use of renewable energy instead of fossil-foils are taken. Bangladesh, the world’s eighth most populous country in the present century, has plenty of opportunities to develop its economy and achieve a better GDP growth in 2016. It had GDP growth rate of 6.5 per cent in 2015 and is expected to post 6.7 per cent growth in 2016. It has a large pool of skilled and unskilled workers, who work in vibrant private sector industries and businesses. But Bangladesh is much behind in FDI inflows because of poor industrial infrastructure, lack of energy, poor communication system and the last but not the least, the never-ending political instability. These are the root causes and great impediments on the way of industrial development, FDI inflows, and expansion of businesses in Bangladesh. Doing business sheds light on how easy or difficult it is for a local entrepreneur to open and run small, medium and big-size businesses when complying with relevant regulations. It is a Herculean task for a businessman to face tough regulations that affect 11 areas in a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labour market regulation. The position of Bangladesh in ‘doing business’ criteria determined by the World Bank is 172 out of 189 which is not satisfactory at all. The economy of the country is expected to be gloomy in 2016 like that of 2015 unless conditions for ‘doing business’ are improved. In the whole world, oil-importing economies are getting the direct economic benefits from continuous falling of oil prices at the cost of the oil-exporting countries. But in Bangladesh, consumers, private sector industries and businesses are not, as no reduction in oil price has been made by the policy-makers in line with international oil price. Only long-lasting political harmony, practising true democracy, ensuring political stability, and economic policy certainties in Bangladesh can guarantee a robust economy in 2016. Proper implementation of recent Monetary Policy Statement (MPS) of the central bank of Bangladesh emphasising great importance on growth of the private sector and reduction of interest rate may improve investment climate and the economy in 2016. To improve the economic performance in 2016, weak and vulnerable sectors like capital market and real estate sector need to be supported by fiscal and monetary policies. The writer is a Fellow Chartered Accountant (FCA) and a CFO of a private group of industries;
