6. Populism spreads over Europe affecting the elections in France and Germany. Angela Merkel loses the vote in September. Across Europe the electorate questions the usefulness of the European Union and, by the end of the year, plans are actively discussed to close it down, abandon the euro and return to their national currencies.
Largely incorrect. Catalonia held a controversial referendum seeking independence from Spain. But the rise of populism in Europe’s dominant countries lost momentum. The overwhelming victory of Emmanuel Macron in France’s elections in May and June spelled the collapse of the populist Front National. In Germany, while Angela Merkel’s Christian Democrats won the September election, their poorer-than-expected showing has forced her into new coalition talks – still underway as of early January – and weakened her position. There have been no serious talks about closing the European Union or abandoning the euro.
7. Reducing regulations in the energy industry leads to a surge in production in the US. Iran and Iraq also step up their output. The increased supply keeps the price of West Texas Intermediate below $60 for most of the year in spite of increased world demand.
Largely correct. Oil production in the US did indeed grow from around 8.8m barrels per day in December 2016 to around 9.8m in December 2017. And while Iraq’s production remained roughly the same, Iran’s did increase. The WTI crude oil stayed below $60 for most of the year, inching above it only in late December.
8. Donald Trump realises he has been all wrong about China. Its currency is overvalued, not undervalued, and depreciates to eight to the dollar. Its economy flourishes on consumer spending on goods produced at home and greater exports. Trump avoids punitive tariffs to prevent a trade war and develops a more cooperative relationship with the world’s second largest economy.
Largely incorrect. The renminbi appreciated in 2017, ending the year at 6.50 to the dollar. China’s economy continued to grow at around 6.9% as it pivoted ever more toward consumer spending and domestic demand. Exports grew compared to 2016, but imports grew even more, thanks to the stronger currency. The US government held off on hostile trade actions against China.
9. Benefiting from stronger growth in China and the US, real growth in Japan exceeds 2% for the first time in decades and its stock market leads other developed countries in appreciation for the year.
Largely correct. Japan’s real GDP grew by 2.1% year-on-year in September 2017, the highest number since mid-2015. The Nikkei 225 grew by 19.1% in 2017, doing very well compared to other developed markets (S&P500: 19.4%, FTSE 100: 7.6%, DAX: 12.5%).
10. The Middle East cools down. Donald Trump and his Secretary of State Rex Tillerson, working with Vladimir Putin, finally negotiate a lasting ceasefire in Syria. ISIS diminishes significantly as a Middle East threat. Bashar al-Assad remains in power.
Largely correct. The power and reach of ISIS has diminished significantly. The most recent ceasefire in Syria, negotiated by the US, Russia and Jordan, appears to be holding, despite frequent breaches. Bashar al-Assad remains in power. However, the war in Yemen continues, making it “the most wretched place on earth” according to The Economist.
The total? Six predictions correct or largely correct and four wrong or largely wrong. In 2017, slightly better than half of Wien’s surprises were more of a hit than a miss.
For 2018, Wien’s new list of surprises was published on 2 January on the firm’s website.
