9 trends that shaped the economy in 2014

2014 was the year of health – or, more precisely, health crises. In Guinea, Liberia and Sierra Leone the Ebola virus killed almost 7,000 people. That led to fear and sometimes hysteria in others parts of the world. In the end, though, the virus was largely contained to the three West African countries, causing their economies to suffer and elections to be postponed. Instead of running away from the virus, some health workers ran towards it, and that made them Time Magazine’s Person of the Year.

The world in 2014 was still rife with armed conflict and security crises, from the Middle East to Africa, and from Ukraine to Mexico. In Ukraine, a civil war turned into a territorial conflict with Russia and caused an economic slump in Ukraine. In Syria and Iraq, ISIS rose to power, taking control of large swaths of land and their local economies. Finally, Israel’s offensive in Gaza destroyed whole sections of Gaza’s economy and halted economic growth in Israel.

It was also the year of oil, and more importantly, the price of it. A barrel of crude oil traded for about $100 in June, and dropped to less than $60 by the time of writing. For some, this came as a surprise, but others had predicted it. The economic consequences were felt from the US to Saudi Arabia, and from Russia to Venezuela. It led to a number of publications, from the Financial Times to our own Forum Blog, to gauge what the drop in prices meant, and for whom.

On the stock market, 2014 was a year of highs for the US and India, and a year of lows for Russia and Germany. But there were many other winners and losers. As such, the stock-market performances were symptoms of the global divergence in economic growth and monetary policies, expected to continue in 2015. Central bankers around the world are making different decisions when it comes to managing their monetary systems, and politicians are finding new ways to reinvigorate growth and balance their budgets.

The former three stories came together as a perfect storm for Russia. The nation saw its economy hurt by sanctions (because of its involvement in Ukraine) and by the drop in the oil price. These trends went hand in hand with a falling stock market. In the end, these events crystallized into a fully fledged currency crisis, with the Russian rouble falling more than 50% in one year.

2014 was also a year of elections dominated by economic themes, whether in Brazil, India or the US. The outcome with the highest profile was Narendra Modi’s victory in the Indian parliamentary elections. Many Indians chose to follow Modi’s plan to revive their country’s economic growth. There was also the narrow re-election of Dilma Roussef as president of Brazil despite an economic standstill, and the takeover by the Republican Party of the US Senate in spite of a healthy 3% growth in Obama’s America. More recently, Prime Minister Shinzo Abe won Japan’s early parliamentary elections for the second time running, showing many voters still believe in Abenomics.

2014 saw a lot of turbulence in the technology world as well. Chinese online marketplace Alibaba had the world’s largest ever IPO, rising $25 billion on the New York Stock Exchange. The American taxi service company Uber raised $1 billion, to become the most hyped tech company since Facebook. But not all news was good, as Uber was also banned in cities from Delhi to Las Vegas, and criticized for its practices. Meanwhile, other tech giants such as Google came under the scrutiny of law-makers in Europe, raising the question of whether tech monopolies should be broken up.

In sport, it was the year of the beautiful game – i.e. football (or soccer). Football was loved, because the FIFA World Cup in Brazil brought joy to people around the world. But it was hated as well, as many people in football-crazy Brazil preferred getting better public services over World Cup stadiums, while the FIFA’s decision to host the next World Cups in Qatar and Russia led to allegations of and investigations into corruption. It led to several companies dropping their FIFA sponsors contracts, worth hundreds of millions of dollars.

In the world of finance and taxation, the so-called Lux Leaks investigation of the International Consortium of Investigative Journalists revealed many secret tax deals made by companies in Luxembourg, and sparked a debate about the ethics of tax optimization by multinational companies. More broadly, the French economist Thomas Piketty started the economic debate of the year, with his book, Capitalism in the 21^st Century. In it, he argues that growing income inequality is holding the world back from further progress.

Finally, 2014 was a year of remembering the past. Twenty-five years ago, the Berlin Wall fell, which led to the disintegration of the Soviet Union, and the economic integration of Western and Eastern Europe. And 100 years ago, Europe went into the first of two world wars, ending the first era of globalization and turning European economies into war economies. In 2014, the question was: can it happen again?

Author: Peter Vanham, Senior Media Manager, World Economic Forum.

Image: Health officers in full protective gear wait to cross a road in Hong Kong January 28, 2014. REUTERS/Tyrone Siu