In a special preview webcast hosted by EMEA editor, Thorold Barker, the Wall Street Journal (WSJ) and Financial News looked at the issues that will undoubtedly be touched upon and the factors that will dictate whether this is a bull or bear year for global industry.
Simon Nixon, chief European commentator, said that the biggest challenge of 2014 - rather ironically considering the doom and gloom of recent years - is that the surprisingly strong economic recovery will force governments to unravel their current “unconventional policies”. Due to the unprecedented nature of these policies, the biggest threat to the global economy this year, he added, could be how governments move forward from this anomalous period. Having said that, the question remains, “is Europe letting the world down?”
It’s no secret that the eurozone has failed to reform itself adequately and it has consequently lagged behind its global peers. In some quarters there is even talk of deflation, which would be catastrophic for long term projects such as new builds. Whilst the ECB has been quick to quash these rumours, the WSJ panel predicted there will be calls at Davos for the deployment of ‘macro-prudential tools’ and increased state governance. As financial editor, Francesco Guerrera said, “it’s a very uncertain period for investors.” And in the eurozone at least, “the skills of asset and fund managers will come to the fore.”
As far as the world’s ‘emerging markets’ are concerned Guerrera continued, it’s become clear that their growth is, for now at least, inextricably linked to the prosperity of the old stalwarts. It was a very disappointing 2013 for the heavily backed BRICS, MINTS and other burgeoning economies. And 2014 will be “risk on, good and risk off, bad”, Guerrera explained. That is to say, if investors are feeling courageous, these economies will reap the benefits, but if the Eurozone’s engine fails to start, and investors crawl back into their shell, it could be another sluggish year for them. Builders and brokers alike will be hoping for a bullish year, not only to prop up optimistic UHNWI growth predictions, much of which will come from these emergent powers, but to ensure that there is adequate liquidity within the market.
The mood in China is already tense said deputy editor in chief, Rebecca Blumenstein. Rapidly deteriorating relations with Japan was identified by the panel as one of the biggest threats to global growth, whilst the escalating price of its industrial revolution being paid by the Chinese nation is starting to cause cracks. “Factories are already being closed”, Blumenstein said, “and the costs will be felt both politically and in terms of slowing down growth.”
The final conundrum global industry will face in 2014 is the increasing speed with which the paradigm is shifting away from technology, towards knowledge. As the introduction of technology into industry becomes the norm, and the leverage of manpower weakens, smart companies are eschewing infrastructure investments in favour of knowledge. It seems knowledge is power again, and that’s something for a reticent superyacht industry to consider.