Global Trends by Martin Khor

Monday 31 December 2012

Present trends will continue in 2013

The new year will start with two economic crisis events in the United States, but otherwise we can expect 2013 to continue with the trends of the passing year.


If 2012 is the year that did not bring about the end of the world, then 2013 should be the beginning of a new era, according to the Mayan prophecy.

But it is unlikely the new year will herald a brand new age for the world as a whole.  More probably, it will continue the trends in the old year, but in more pronounced and deeply felt ways. 

2013 starts with the United States falling from the “fiscal cliff” -- or else escaping from that at the last moment.

If the fiscal cliff takes effect fully, up to 4 percentage points of GNP are expected to be sucked out of the U.S. economy due to tax increases and government spending cuts combined, thus resulting in a new recession.

Another problem will soon reach crisis point.  The US government debt will reach its mandated limit around now, and President Obama and Congress will have one to two months to negotiate an increase in that limit before the administration runs out of money to pay for its operations or service its debts.

Thus, we can expect the first two months of 2013 to be preoccupied with the drama of the US politics on debt, taxes and government spending. 

It seems that the President-Congress and Democrat-Republican bitter battles of the last few years will return at the start of Obama’s second term.  If so, the United States’ political paralysis will be reflected in economic policy deadlocks.

The economic crises in the US, and how they play out, will have a big impact on 2013 world-wide, especially since Europe is already in the midst of a recession.

With the uncertainties in the major developed economies, and the softening of the economies of China, India, Brazil, most developing countries will face economic difficulties this year, but the extent of this is to be seen.

On the political front, the on-going economic turmoil will lead to political changes in many European countries, and the future of the European Union and the Eurozone will themselves come under significant strains.

The next chapter of the Middles East drama is quite unpredictable.  Israel, with its right-ward tilt, is expected to become even more aggressive, as its recent plan for more settlements in Jerusalem shows, and this may increase its isolation further.

But whether the Palestinian parties can unite and take advantage of its strong resistance in Gaza, its new UN-adopted status as a state, and the decline in Israel’s international support, is to be seen.

The Iran nuclear issue will continue to occupy news attention, with the Western countries having to decide whether to negotiate with Iran or intensify the sanctions (or both) or prepare for a military attack (thankfully this does not seem likely).

The Syrian civil war will still dominate the TV channels as it enters another phase and perhaps an end-game, while the continued struggle for Egypt’s future political and social system will also have major effects on the region and the world.

In Asia, the world will watch closely whether the final stage of China’s leadership change-over to the new President Xi Jinping and Prime Minister Li Keqiang in March will begin a new era or continue the policies of the past decade.

Malaysia will have its place in the global spotlight with the general elections, most likely in March.  Whatever the results, this closely contested elections will be a watershed in the political life of the nation. 

India too is a state of significant political and economic flux, and 2013 will be used by the political parties and forces to prepare for the climax of the general elections in 2014 and it is anybody’s guess who will come up on top.

Even as politics and economics continue to occupy the most attention, 2013 will remind us with greater force that Nature forms the bedrock of our societies and our civilisation.

The passing year brought its share of natural disasters to rival those of the previous recent years, and 2013 could even see worse extreme weather events around the world.  Global greenhouse gas emissions continue to increase, despite greater awareness about the dangers of climate change.

Last week’s big floods in Malaysia’s East Coast states could be a harbinger of worse to come in the country and the region. The Philippines, having suffered a typhoon in its Southern region in early December, had to cope with another big storm in its central region last week.

These are reminders that each country should improve its natural disaster preparedness, as well as to finalise its national strategy to address climate change.

And there are many other environmental issues to give high priority to, including water scarcity and quality, deforestation, biodiversity conservation, toxic chemicals and wastes, and pollution of all types. 

It will be an interesting year ahead.  Happy new year to all readers of Global Trends!