Wednesday, December 7, 2011

Eight Probable Economic Trends in 2011

The year 2011 is one of immense economic and social change, as the shift in economic power continues to move east. What are the eight probable economic trends for 2011?
1. Renewed Turmoil in Our Banking Sectors
Some banks still remain overexposed to potential downturns in our stock markets. This has been created by holding onto vast amounts of "investments" in derivatives, rather than previously passing on all this potential toxic debt to our governments. If there is a major crisis in Korea, or a sudden natural disaster- then this exposure could eventually led to further bank bailouts.
2. A European Backlash Against Austerity
Deep austerity measures in the eurozone, are seen by many as a necessary need, but at the same time perceived as being too unbalanced and unfair. This belief could lead to more demonstrations, and the prospect of any number of European countries defaulting on their debts- the euro could still be saved, but the cost may result in an economically weakened Europe.
3. Closer ties between China, India and Russia
At the end of 2010, Russia and China agreed to trade energy and goods in their local currencies, abandoning the use of the US dollar. India also signed similar agreements, with both China, and Russia, shortly after this historic trade pact.
Signs are that all three countries could effectively continue economic expansion, and at the same time hail the start of a new renminbi, rupee, and ruble trade zone.
4. Further Growth in the Luxury Market
Despite a recession, sales of private aircraft, vacations in luxury resorts and sales of high end luxury brands continue to grow. New chic apartment hotels in Paris and the growth of luxury travel are signs that the global economy is improving.
5. Mixed Results for the US Dollar
A weakened US dollar still remains the international currency of debt and trade. this allows the Federal Reserve more leeway in printing dollars to flow into the economy.
This simple fact keeps the dollar strong, despite high national debt levels, and lack of business induced growth. Greenback values may still continue to decline, but should remain stable against some currencies, because so many nations hold vast reserves in the greenback. Look for further declines in the US dollar value in 2011.
6. Growth in China, East Asia and the Developing World
Brazil, China, East Asia, India, and Russia continue to register economic growth, whilst continued global de-coupling from Europe and the United States, expands as these nations improve trade with African, and South American countries.
7. Renewed Interest in Alternative Energies
Despite the rhetoric about a 'Green Energy revolution," in the developed world, 2011 could become the year- real interest through necessity, replaces forgotten promises.
This change may be brought about because of the increased cost of fossil based resources and the need to create cheap energy- as a declining energy poor United States & Europe have less to spend on these traditional resources.
8. The Rise of Cloud Computing
Austerity and cost cutting could create the need for large Corporations in the developed world to trim costs by simply locally outsourcing its IT work to outside companies, which effectively take over the billing and payroll management of a corporation, moving it online.
Estimates on this changeover by the EMU (European Monetary Union), state that billions could be saved, whilst over half a million new jobs are created.
One drawback could be that these global companies may decide simply to relocate this work to the East, rather than inside Europe or the USA. Creating new jobs, but not in the countries where their headquarters are located.
2011 could be a year of turmoil, continued economic growth and increased austerity. As our societies are growing towards a truly global economy, the unforeseen consequences of these effects are both renewed wealth creation and increasing poverty. Where this eventually leads depends solely on how developed economies evolve during this change, and whether this is acceptable inside the homes of those adversely affected by a changing global economy.

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