2015 to be toughest year since recession: Minton Beddoes

2015 will be the toughest year for global business since the recession of 2008-09. That’s according to Zanny Minton Beddoes, Business Affairs Editor at The Economist.

Minton Beddoes says expect turbulence in share prices, interest rates and currencies in 2015. “It’s not a grim prediction,” she says. “It is a prediction for more volatility.”

Global economic growth has been sluggish since 2012, but businesses have fared well.  Corporate profits are soaring.  Stock buybacks, which have given equitiies a boost, hit a record $500 billion by the mid-point of this year. At the same time, sky high profits have boosted merger and acquisition activity. Deals are likely to top $3 trillion in 2014.

All of this is happening against the backdrop of a relatively strong U.S. economy.  GDP grew at a rate of 3.9% last quarter following a 4.6% increase in the previous three months, the biggest back-to-back gains since late 2003. Stock markets are breaking record highs. Jobs are back. After a blockbuster November jobs report on Friday, 2014 will see the strongest job growth since 1999.  Even small business optimism is at its highest in more than seven years.

But at the same time, the rest of the leading global economies are struggling. Japan’s economy is now officially in a recession and Europe is teetering on the brink of one. China’s economy is still growing but at a much slower pace, after being one of the main drivers of the global economy over the past decade. Russia is getting hit by lower oil prices and economic sanctions levied by the U.S. and European Union as the conflict in Ukraine continues.

“The other parts of the rich world [are] not doing very well, with monetary policy going in the opposite direction.” She says the emerging world looks “sluggish at best.” That spells volatility ahead.

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At the same time all this macro volatility is taking place, Minton Beddoes points to huge amount of disruption going on at the micro level coming from a "digital revolution." It's a revolution, she says, that is accelerating and is poised to shake the business world. “Disruptive innovation is a total cliché but it’s really happening and it’s happening in more and more industries.“

Companies like Uber, Airbnb, Kickstarter and Rent the Runway are prime examples of these massive tech start ups that can upend an entire industry.  Minton Beddoes says a relatively stable global economy has been able to absorb this digital revolution so far but that may change in 2015.

“I suspect you are going to have a lot more upheaval there, a lot more disruption coming from the digital revolution, she says. “It’s hard to name a sector because I think just about everybody is going to be affected.”

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