By Alejandro Roche
Three weeks or so ago, we were all hugging our friends and family, laughing and cheering for the arrival of 2012. Holding glasses of champagne, we would wish each other a prosperous New Year.
Well, in this regard, certain regions of the world can be more optimistic than others. According to the IMF, emerging markets will contribute over 80% of world GDP growth in 2012. Overall, the Fund expects world economic output to slow to 3.3%, against an estimate of 3.8% for 2011. In 2012, the world’s economic power will continue to shift towards the emerging markets. See chart below for the expected growth rates in different countries or regions of the world:
But enough numbers – what about politics? 2012 is going to be a really interesting year to find out how the developed world will deal with the economic crisis. Two elections —in France (April and May) and the US (November)— will determine the strategy of these two key countries. In the case of France, the election results will also have a great influence on the way the European Union responds to the crisis.
In France, my prediction is that the socialist candidate, François Hollande, will beat Nicolas Sarkozy. Mr. Hollande has been very critical with Angela Merkel’s leadership during the crisis, and with the copycat politics carried out by Mr. Sarkozy. With a socialist president, France will probably counterbalance the radical austerity measures promoted by Germany. In this scenario, it is foreseeable that the EU takes a more pragmatic and flexible approach: delaying the budget cuts, relaxing the social restructurings, and allowing for a more active participation of the European Central Bank that would alleviate the situation of the countries under financial stress.
In the US, my prediction is that Barack Obama will be re-elected – very easily if the Republicans go with their heart and their candidate is Newt Gingrich, and by a narrower margin if GOP supporters go with their head and Mitt Romney ends up winning the party nomination. President Obama has lately been taking a bolder stance on the economic front —especially after his State of the Union speech—, which will be the main battlefront in the presidential election. Moreover, the most recent economic data have been positive for his campaign. If my two predictions end up becoming true, I expect better cooperation between the US and the EU in stimulating the economy to fight recession and create growth and jobs.
In 2012 we will also know what happens with Iran’s attempt to obtain nuclear weapons and other key issues that will determine world stability: the situation in Egypt and other countries affected by the so called “Arab Spring”, and how the transition of power occurs in North Korea. In the case of Iran, it looks like the US is succeeding in building a coalition against Ahmadinejad’s regime, convincing allies like the EU to ban imports of Iranian oil. Even Brazil is chilling its once friendly ties with the ayatollahs. My prediction is that American diplomatic moves and sanctions will be effective in deterring an increasingly isolated Iran from pursuing the nuclear bomb.
Finally, 2012 will tell us if two authoritarian leaders are still supported by their people or not. Vladimir Putin and Hugo Chavez will face elections in March and October respectively. Since they control the media and repress the opposition, chances are they will win again, but probably with diminished support.
Overall, my predictions seem quite optimistic: even though the economic crisis will keep hitting the US and other developed countries —we already knew this—, cooperation between the US and the EU will improve, and we will not go to war with Iran. But what about our day-to-day at SIPA? Well, I wish I could predict an express elevator that would solve all our mobility problems, or new gourmet food at Alice’s Café, but I unfortunately do not see any sign in this direction.
Alejandro Roche is a second-year Master of International Affairs student. This article first appeared in the January 31st, 2012 issue of Communiqué.