This is part 2 of Mark's thirteen suggestions (in no particular order) of things to look out for in the global economy this year. Part 1 is here.
5. China's growth prospects
We spent quite a lot of 2012 on The Interpreter debating China's growth outlook, wondering whether last year's significant slowdown was mainly cyclical, mainly structural, or a combination of the two. After all that analysis, it will be important to peer through the smog to see which theory gets the most support from 2013's growth performance, and hence try to gauge just what the new normal is for Chinese growth.
6. And India's...
Last year was more a case of India tarnished than India shining. The financial press was filled with stories of the failings of Indian infrastructure (including the largest electrical blackout in history), political gridlock and corruption scandals. Growth has disappointed, to the extent that the current fiscal year is now likely to deliver the lowest outcome in a decade. There have also been warnings of sovereign ratings downgrades.
Stung by all the criticism, last year did see New Delhi make an effort to reinvigorate the reform process, but with elections due in May 2014, delivering more progress could be tough.
7. Geo-politics and geo-economics in the East and South China Seas
Tensions remain high in the East China Sea, where in the worst case a miscalculation could have profoundly destabilising consequences. And although it's recently been put in the shade by the Sino-Japanese sabre-rattling over the Senkakus/Diaoyu islands, tensions are also significant in the South China Sea. As I've noted before, these rising geo-political tensions may turn out to have important geo-economic consequences even under much more likely scenarios than the worst-case ones.
8. Keep an eye on food prices
Last year, we were reminded of the world's vulnerability to food price shocks. As experts warned at the time, 'even in a good year, global grain production is barely sufficient to meet growing demands for food, feed and fuel...in a world where there are 80 million extra mouths to be fed every year.'
Although the feared crisis failed to materialise in 2012, there were signs of a 'new norm' of high and volatile prices. Will prices spike again this year? Some good news came with the latest reading from the FAO's food price index, which dropped for a third consecutive month in December 2012. But low stocks are likely to limit price falls, and leave global food balances vulnerable to weather shocks.
Photo by Flickr user Andrew Middleton.