16 key questions about 2016: Will SA need an IMF bailout? President Hilary?

With the new year just hours away, the cream of the Financial Times’s 600 journalists have been persuaded to offer the rest of us an insight into what they think 2016 will bring. In keeping with the theme, 16 questions were posed with only yes or no answers acceptable. The key one for South Africans is whether a member of the G20 would go bankrupt in the coming year. Martin Wolf’s response accelerates RW Johnson’s “two to five year” forecast a few months back. Wolf’s insights should be taken very seriously – he is one of the world’s most respected economic commentators and well informed on SA’s situation. It’s worth having another look at his detailed assessment of the country after a recent visit, his first in many years (hint: without rapid change a populist disaster is inevitable). Another key question for this country is whether the crony-driven, economically disastrous leadership of President Jacob Zuma will be perpetuated in 2016. We should have an answer to that one soon enough. Rumblings sparked by Zuma’s December 9 firing of respected Finance Minister Nhlanhla Nene have been gathering momentum. January promises to be an interesting month. – Alec Hogg    

From the Financial Times of London

A New Year beckons and the Financial Times once more indulges in the ritual of forecasting the 12 months ahead. Our experts and commentators set caution to one side and predict what will happen in everything from the US presidential election to the Euro 2016 football tournament.

A quick judgment on how they did last year. Ed Crooks correctly forecast that the oil price had further to fall, a brave claim at the end of a year in which it had already halved. Martin Wolf said the ECB would adopt full quantitative easing, which it did. Clive Cookson rightly opined that Ebola would be eliminated in west Africa by the close of 2015. Gideon Rachman said Vladimir Putin would annexe no further territory in Ukraine and Europe. Not many at the end of 2014 were saying that.

We got one wrong. Jonathan Ford was among many who assumed the British general election would end in a hung parliament (he went so far as to predict a national government). Otherwise, the fault last year lay not with the answers we gave but the questions we failed to ask. We did not foresee a surge of Isis-sponsored terrorism in France; that Russia would take military action in Syria; and that the migrant crisis would become a grave threat to the EU. In 2016 too, events will happen that are as yet beyond our imagination. – James Blitz

Will Hillary Clinton win the US presidential election?

Hillary Clinton
Democratic Presidential candidate Hillary Clinton speaks during an appearance at Texas Southern University in Houston, Texas, 2015. REUTERS/Donna Carson

Yes. It will be a rollercoaster election – and the nastiest in memory. Mrs Clinton will be pilloried by her Republican opponent, Ted Cruz, for her character flaws and weaknesses in the face of America’s enemies. A large chunk of the electorate will hold up the Clinton name as an emblem of all that is wrong – and corrupt – about today’s America. But elections are still won in the centre, or what is left of it, and Mr Cruz will be too far to the right of the median voter to make it to the White House. Despite uncomfortably close polls, Mrs Clinton will win the electoral college by a landslide. Democrats will take back the Senate. But she will start her term in a very polarised Washington. There will be no honeymoon. – Edward Luce

Will Britain leave the EU in the referendum expected in 2016?

Britain's Prime Minister David Cameron presents the Conservative party election manifesto in Swindon,, 2015. REUTERS/Peter Macdiarmid/Pool
Britain’s Prime Minister David Cameron presents the Conservative party election manifesto in Swindon,, 2015. REUTERS/Peter Macdiarmid/Pool

No. Britain will vote to stay in the European Union. Not with any sense of enthusiasm or excitement but because the innate common sense of British voters ultimately will prevail. Forget the technical arguments about whether David Cameron manages to secure a good deal in his renegotiation or whether the UK gets back its contribution to Brussels in increased investment and trade. Consider instead the protagonists on both sides. In the end voters will choose between the calm logic of former prime minister John Major and the populism of Ukip’s Nigel Farage. My money is on Mr Major. If I am wrong, Britain faces truly turbulent times. – Philip Stephens

Will Bashar al-Assad still be in power 12 months from now?

Free Syrian Amy fighters walk with their weapons prior to clashes with forces loyal to Syria's president Bashar Al-Assad during clashes in Old Aleppo, 2015. REUTERS/Abdalrhman Ismail
Free Syrian Amy fighters walk with their weapons prior to clashes with forces loyal to Syria’s president Bashar Al-Assad during clashes in Old Aleppo, 2015. REUTERS/Abdalrhman Ismail

Yes. Assad will remain nominally president of Syria in 2016, even if in reality he has already been reduced to the status of the biggest warlord rather than the ruler of a state. Militarily, he has been bolstered by the Russian military intervention that has targeted his rebel enemies. Politically, a US-Russian plan agreed in recent weeks envisages an 18-month transition and is fraught with risks. Even in the event that a peace process gains traction, Mr Assad will do his best to stall and hold on to his seat of power in Damascus. – Roula Khalaf

Will the Bank of England finally raise interest rates next year?

Mark J. Carney, Governor of the Bank of England is captured during the session ‘The Global Economic Outlook’ at the Annual Meeting 2015 of the World Economic Forum at the congress centre in Davos, 2015. WORLD ECONOMIC FORUM/swiss-image.ch/Photo Moritz Hager
Mark J. Carney, Governor of the Bank of England is captured during the session ‘The Global Economic Outlook’ at the Annual Meeting 2015 of the World Economic Forum at the congress centre in Davos, 2015. WORLD ECONOMIC FORUM/swiss-image.ch/Photo Moritz Hager

No. The Bank of England will flirt with rate rises through much of 2016, it will tease, but in the end it will not put its money where its mouth is. It has good reasons to avoid a decision. Inflation will lift off from zero very slowly, wage growth is weak; oil prices are weaker; and deficit reduction will prevent a boom. The BoE is keen to try its new powers to limit credit first before thinking about interest rates. The consequences of a spell of higher than target inflation are also limited. Later in the year, the BoE might decide to act, but even if it did, it would not make much difference. As far as interest rates are concerned, Britain is in what governor Mark Carney says is a “low for long” world for some time longer than 2016. – Chris Giles

Will at least one member of the group of 20 leading economies request an IMF assistance programme in 2016?

Managing Director of the International Monetary Fund Christine Lagarde speaks at a press conference at the Treasury in London, December 2015. REUTERS/Stefan Rousseau/Pool.
Managing Director of the International Monetary Fund Christine Lagarde speaks at a press conference at the Treasury in London, December 2015. REUTERS/Stefan Rousseau/Pool.

Yes. Within the G20, no developed member will need a rescue. The only conceivable candidate is Italy, given its high public debt. But the European Central Bank’s support, including quantitative easing, protects it.

The G20 also contains 10 emerging economies. Some are being buffeted by sharp falls in commodity prices (Argentina, Russia and Saudi Arabia are prime examples). Some run significant current account deficits (Saudi Arabia again springs to mind, along with Brazil and South Africa). Both India and South Africa have fairly large fiscal deficits. Others, such as Brazil, have a smaller deficit but a sizeable burden of public debt. The countries that tick all the boxes for instability are Argentina, South Africa and Brazil. Under stress, those countries have recently changed finance ministers. Argentina has a new government that promises a new approach. The IMF stands ready. Will at least one of these countries call upon it? It seems likely. – Martin Wolf

Will Brazil’s Dilma Rousseff be impeached before the Olympic Games begin in Rio?

Brazil's President Dilma Rousseff speaks during a press conference to announce a cabinet reshuffle at the Planalto Palace in Brasilia, Brazil, 2015. REUTERS/Ueslei Marcelino
Brazil’s President Dilma Rousseff speaks during a press conference to announce a cabinet reshuffle at the Planalto Palace in Brasilia, Brazil, 2015. REUTERS/Ueslei Marcelino

No. But it will be a close-run thing. For now, Ms Rousseff probably has enough support in Congress to stop the process. But the more time passes, the worse the country’s recession and the weaker her political support becomes. Impeachment proceedings, even if the House of Representatives votes for them to go ahead, will probably only begin on February 10. Assuming the process’s complex sequencing then takes its full 180 days, Ms Rousseff could be impeached in mid-August. That would be after the Olympics officially starts onAugust 5 – phew – but, still in time for the high-jump final on August 16. – John Paul Rathbone

Will Angela Merkel still be German chancellor at the end of the year?

A migrant holds a portrait of German Chancellor Angela Merkel after arriving to the main railway station in Munich, Germany September 5, 2015. Austria and Germany threw open their borders to thousands of exhausted migrants on Saturday, bussed to the Hungarian border by a right-wing government that had tried to stop them but was overwhelmed by the sheer numbers reaching Europe's frontiers. REUTERS/Michael Dalder
A migrant holds a portrait of German Chancellor Angela Merkel after arriving to the main railway station in Munich, Germany September 5, 2015. Austria and Germany threw open their borders to thousands of exhausted migrants on Saturday, bussed to the Hungarian border by a right-wing government that had tried to stop them but was overwhelmed by the sheer numbers reaching Europe’s frontiers. REUTERS/Michael Dalder

No. Although 2015 ended with Ms Merkel receiving a standing ovation at the conference of her ruling Christian Democratic Party (CDU), 2016 is likely to see the end of her long reign as chancellor. That ovation looked like conclusive proof that her job is safe – despite the pressures caused by the arrival of about 1m refugees in Germany in 2015. But Ms Merkel has now promised to reduce refugee flows next year. This is likely to prove undeliverable as desperate migrants, aided by people smugglers, continue to flow in.

Admiration for the chancellor’s courage and moral leadership will give way to uncertainty and discontent. The cracking point could be a revolt from local governments, who pronounce themselves unable to cope with the numbers. That, in turn, would finally provoke a challenge to the chancellor from within the CDU, making her position untenable. – Gideon Rachman

Who will win the Euro 2016 football tournament?

Belgium's Kompany and Algeria's Soudani fight for the ball during their 2014 World Cup Group H soccer match at the Mineirao stadium in Belo Horizonte
Belgium’s Kompany and Algeria’s Soudani fight for the ball during their 2014 World Cup Group H soccer match at the Mineirao stadium in Belo Horizonte.

Belgium, the best team in the world, according to recent Fifa rankings. That arcane coefficient overstates Belgium’s quality, but not by an exorbitant margin. Through an advanced system of scouting and coaching – and a liberal naturalisation policy for immigrants – this small nation under a rickety state has produced a torrent of elite players. Belgium can field an attacking trio of Eden Hazard, Kevin de Bruyne and Romelu Lukaku, Premier League stars whose combined market value would touch £150m. The German squad is more seasoned, Spain’s more cohesive, but Belgium lacks little in sheer technical quality. With France playing host, there is also something akin to home advantage. – Janan Ganesh

Will China devalue the Renminbi significantly next year?

Chinese banknotes are seen in a vendor's cash box at a market in Beijing, REUTERS/Kim Kyung-Hoon/Files
Chinese banknotes are seen in a vendor’s cash box at a market in Beijing, REUTERS/Kim Kyung-Hoon/Files

Yes. China has good reasons to want to keep the renminbi stable against the US dollar in 2016 – a strong merchandise trade surplus, massive foreign exchange reserves and a desire to show the world that the “redback” is a worthy reserve currency. But the renminbi is still likely to depreciate to about Rmb7 to the US dollar, down from about Rmb6.48 currently. The flagging Chinese economy is likely to need at least two interest rate cuts next year while the US dollar is supported by continued Fed tightening. That should keep capital outflows from China at a high level, putting downward pressure on the currency. The renminbi’s trajectory is unlikely to be smooth. This may well be the most volatile year ever for the Chinese currency. – James Kynge

Will Jeremy Corbyn still lead Britain’s Labour party a year from now?

Jeremy Corbyn, the new leader of Britain's opposition Labour Party takes part in his first Prime Minister's Questions in the House of Commons in Westminster, London, 2015.The new leader of Britain's opposition Labour Party, veteran leftist Corbyn, confronted Prime Minister David Cameron in parliament and said the house's raucous weekly question-and-answer session should be less theatrical and more about hearing ordinary people's voices. REUTER/Parliament TV/Handout via Reuters
Jeremy Corbyn, the new leader of Britain’s opposition Labour Party takes part in his first Prime Minister’s Questions in the House of Commons in Westminster, London, 2015.The new leader of Britain’s opposition Labour Party, veteran leftist Corbyn, confronted Prime Minister David Cameron in parliament and said the house’s raucous weekly question-and-answer session should be less theatrical and more about hearing ordinary people’s voices. REUTER/Parliament TV/Handout via Reuters

Yes, and for several reasons. The first is that a majority of the party, if not its MPs, want him to. Despite Labour’s weak showing in the opinion polls, the rank-and-file seem happy with the direction the party is taking. Then, there is the congenital loyalty of Labour MPs. Unlike the Tories, the party has never excelled at assassinations. And in any case if, as now seems likely, Mr Corbyn tweaks the party’s unclear leadership election rules to ensure that the incumbent is on the ballot come what may, any challenge would be quixotic at best. It took the full rhetorical force of Ernest Bevin to hound Labour’s last pacifist leader, George Lansbury, into retirement in 1935 when the then union boss persuaded the party to stand up to fascism. Today’s Labour is still waiting for its Bevin. They seem unlikely to show up next year. – Jonathan Ford

Will Abenomics fail in 2016?

South African Deputy President Cyril Ramaphosa (L) shakes hands with Japan's Prime Minister Shinzo Abe at Abe's official residence in Tokyo, 2015. REUTERS/Toshifumi Kitamura/Pool
South African Deputy President Cyril Ramaphosa (L) shakes hands with Japan’s Prime Minister Shinzo Abe at Abe’s official residence in Tokyo, 2015. REUTERS/Toshifumi Kitamura/Pool

No. The record of Abenomics is mixed, but on balance, it has done Japan’s economy more good than harm. That will continue in 2016. True, the central goal – to get inflation to 2 per cent – has been missed. Because of the oil price collapse, inflation, as normally measured, is still hovering around zero. Shinzo Abe’s government compounded the problem by prematurely raising consumption tax, taking money out of people’s pockets just when it wanted them to spend. Yet the broader reflationary goals of Abenomics are working. Stripped of energy prices, inflation is about 1 per cent. Public debt has stopped rising as a percentage of nominal output. Japan’s companies are making record profits. Mr Abe’sproblem is that he has pledged to raise the consumption tax again in 2017. That is when the crunch could come. – David Pilling

Will Russian athletes compete in the 2016 Olympics?

Yes. There is no political will to punish Russia for resurrecting the mass doping of the Soviet era. Last month, it became the first country in history to be suspended indefinitely from athletic competition until it can prove it is clean. But Moscow and the west are keen to minimise the embarrassment of an independent report that listed some of the worst abuses the sport has seen. To compete in Rio, Russia will have to fire any officials that have been part of doping programmes, resolve all pending disciplinary cases, investigate its doping culture and demonstrate that it has changed its ways. The Russians say this will take three months. – Malcolm Moore

Will sales of cars with diesel engines fall in Europe in 2016?

Volkswagen's logo is seen on a TDI diesel engine of its EOS car in Zurich, Switzerland, 2015. Volkswagen shares plunged more than 20 percent, their biggest ever one-day fall, after news that the German carmaker had rigged U.S. emissions tests, and Germany said it would investigate whether data had been falsified in Europe too. REUTERS/Arnd Wiegmann
Volkswagen’s logo is seen on a TDI diesel engine of its EOS car in Zurich, Switzerland, 2015. Volkswagen shares plunged more than 20 percent, their biggest ever one-day fall, after news that the German carmaker had rigged U.S. emissions tests, and Germany said it would investigate whether data had been falsified in Europe too. REUTERS/Arnd Wiegmann

Yes. European car buyers were already growing less enamoured with diesel engines, and the autumn revelation that Volkswagen had installed software to cheat on emissions tests in 11m diesel vehicles worldwide will exacerbate the decline. Diesel’s penetration among new European cars peaked at 55 per cent in 2010 and has been dropping fast in France, where subsidies have been reduced and scepticism about the environmental impact has risen. VW is a particularly big maker of diesel engines and its sales dropped more than 20 per cent in key markets in November after the scandal. In 2016, diesel’s share will shrink so fast that it will outweigh the growth in the overall car market. – Brooke Masters

Will Brent crude end the year over $50?

Oil workers are seen in front of a refurbished oil refinery in Esmeraldas, 2015. REUTERS/Guillermo Granja
Oil workers are seen in front of a refurbished oil refinery in Esmeraldas, 2015. REUTERS/Guillermo Granja

Yes. The oil market in 2015 was brutal for anyone trusting in a rapid rebound from the previous year’s crash. The tenacity of the US shale industry and surges in output from Iraq and Saudi Arabia meant the world was awash with crude. Next year, the lifting of sanctions on Iran could bring yet more oil to the market. Still, the financial torments of oil producers worldwide are forcing them to cancel projects and cut drilling programmes, curbing future supplies, and the impact will become apparent. Brent crude below $50 per barrel is too low for the industry to make the investments needed to meet growing global demand. Providing the world economy does not skid into recession, this looks like being the year that the oil price heads back to more sustainable levels. – Ed Crooks

Will George Osborne scrap tax relief for pensions in his March Budget?

Britain's Chancellor of the Exchequer George Osborne looks up during a tour of Small Business Saturday Christmas Fair at the Treasury in London, Britain. REUTERS/Stefan Wermuth.
Britain’s Chancellor of the Exchequer George Osborne looks up during a tour of Small Business Saturday Christmas Fair at the Treasury in London, Britain. REUTERS/Stefan Wermuth.

Yes. The UK chancellor put off making a decision on the matter at November’s Autumn Statement. But he sent a strong signal that far reaching change is coming. Upfront tax relief on pension contributions currently costs the exchequer nearly £50bn a year. A mooted “Pensions Isa” would slash this bill as workers would accumulate savings out of their taxed income instead, with the guarantee of withdrawing it tax-free upon retirement. The change would take years to implement. Taxpayers could prepare by making maximum contributions into pensions before the end of the tax year in April. – Claer Barrett

Will 2016 be the year virtual reality finally takes off?

No. But it will be the year in which many experience for the first time what may one day be the most transformative of all technologies. The first view through a VR headset – the chunky goggles used to view alternative 3D versions of reality – is, for most, unforgettable. But great demos don’t make an industry. While VR games are starting to appear, there is a shortage of content for the devices. And the applications that will push it into the mainstream – like visiting a doctor or holding an office meeting in virtual space – are more dream than reality. Still, the technology is set to captivate the public imagination. Physical reality will never seem the same again. – Richard Waters

(c) 2015 The Financial Times Ltd.