“I know enough of the world now, to have almost lost the capacity of being much surprised by anything…” So wrote Dickens in David Copperfield, and it could well describe this past year. Shocks and shock-talk have become so commonplace that it would indeed be a surprise if there were no major surprises. So with a sea of surprises to select from, which one stands out?
This could easily have been the year that mounted the most significant challenge to the post-war geopolitical-economic architecture seen in that 70-year interval. The volley of European elections this year each had significant populist anti-institutional, anti-establishment, anti-1-per-cent, anti-globalization movements that threatened to gain the upper hand, throwing future architecture into limbo. In each case, the status quo gained the upper hand, preserving things…for the moment. Perhaps the surprise is that, unlike the Arab Spring, regimes weren’t toppled.
On this score, no thanks goes to the US and its anti-trade bombast. In a bizarre year of leading-by-tweet and the lingering existential threat of an election-corruption scandal, US protectionism forged ahead with the moral suasion campaign against the international activities of auto-makers and appliance manufacturers, a warning shot to others with similar plans. Actions against Canada’s lumber producers and the vulnerable aerospace sector, not to mention caustic words about the dairy industry, upped the isolationist ante significantly. It all looked that much more serious when in round 4 of the NAFTA renegotiations it seemed that ‘poison pill’ provisions really would scuttle the deal. It’s no surprise that this didn’t happen; America needs the deal too much. What is surprising is that it took the US business lobby so long to get active in support of NAFTA.
So much for Canada’s traditional space. What about the broader world? Oil markets matter to Canada, and two significant events occurred that normally would have shaken the market significantly. First, Qatar was ‘blockaded’ by the its GCC community, and oil prices barely budged. Second, there was a significant regime shift in Saudi Arabia, with dire consequences for certain key leaders. Again, oil prices seemed to yawn. Africa doesn’t usually top the list of surprises, but something that was not foreseen was the toppling of two long-time leaders. OK, that has happened quite a bit in the past half-century, but rarely in the way it happened this year – both Robert Mugabe in Zimbabwe and Jammeh in The Gambia were removed without a single shot fired.
For a long time – too long – India has sort of been the ‘big engine that wouldn’t’. Lots of potential, but not enough will or energy to overcome the significant internal obstacles to growth. Enter the Modi government, which has brought new policies into play that are helping to make India the China of the current economic cycle. Growth is already superior, and it’s looking sustainably so. Two great verifications of progress occurred this year. First, Moody’s gave India its first sovereign upgrade in 13 years. Second, India climbed more than 30 points on the World Bank’s Ease of Doing Business Index. It still has a long way to go, but that is eye-popping progress that should lead to more.
The long list – and we could add a few more things to it – makes it hard to narrow it down to just one. But when we consider the overall picture, it’s clear that eight years beyond the Great Recession, there is still a lot of disruption going on – political, social, economic, technological and military. In this there is enough uncertainty to keep the global economy in ‘pause’ mode. One inescapable fact is that growth has, after all these years, begun to ramp up. Cynics believe this is a ‘last hurrah’, and are still obsessed with the persistent negative effects of structural fissures brought on by the last decline. Even so, forecasts are, for the first time in seven years, being revised upward. Europe, of all places, is in many ways showing the most verve. And after all these years, confidence appears to be back – not just to average, but to near-record levels. We actually expected this, so what’s the surprise? Perhaps that it occurred in spite of significant disruptions. But maybe the bigger surprise to us is that so many are surprised by the new growth.
The bottom line?
Anytime a new wave growth occurs, and especially after such a long lull, I marvel that it almost seems to have a life of its own, quite in spite of ourselves.
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