• From the US producing more oil than Saudi Arabia, China becoming the World’s largest economy and Queen Elizabeth II becoming history’s longest serving monarch, 2015 looks sets to become a watershed year. With thanks to The Economist, we outline some very interesting observations for the new year to come.

 

American energy self-sufficiency

  • Less than a decade ago the concept of ‘peak oil’ and impending energy crisis was front page news. However new technologies like fracking, and renewed exploration activities have not only resulted in the USA achieving energy independence but in 2015 it will also produce more barrels of oil than Saudi Arabia and become a net exporter of energy products. Many aspects of international relations are built around American access to oil and whilst the shale-gas revolution will no doubt benefit consumers with lower bowser prices, the longer term shifts in geopolitical agendas may not be as helpful for global stability.

 

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<h2>Economic World Centre Shifts East</h2>
<ul>
<li>Whilst the centre of global political power has long been debated, new research from Danny Quah of the London School of Economics has produced metrics to calculate the dynamics of the global economic centre of gravity; the average location of economic activity across geographies on Earth. The calculations here take into account all the GDP produced on this planet. LSE found that in 1980 the global economy’s centre of gravity was mid-Atlantic. By 2008, from the continuing rise of China and the rest of East Asia, that centre of gravity had drifted to a location east of Helsinki and Bucharest. In 2015 it will reach Iran. Extrapolating growth in almost 700 locations across Earth, it predicts the world’s economic centre of gravity to locate by 2050 literally between India and China. Observed from Earth’s surface, that economic centre of gravity will shift from its 1980 location 9,300 km or 1.5 times the radius of the planet.</li>
<li>This has major policy implications. If soft power mirrors but lags economic power, then the source for global and political influence will be similarly gradually shifting east over the next 50 – 100 years. Policy formulation for the entire global economy, and global governance more generally, will no longer be the domain of the last century’s rich countries but instead will require more inclusive engagement of the east.</li>
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<p><img decoding=This update does not constitute financial advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek professional advice before acting or relying on any of the content.

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