Events and trends of 2012 give cause for some hope
Now, as always, there are lots of reasons for optimism. While we may live in grim times, and many risks remain to be faced next year and beyond, 2012 was not all bad (and could have been very much worse).
There were, too, events, trends and developments that give cause for hope. Here are some reasons to be cheerful from the year just ending.
The world economy is growing and poverty is on the decline: Although global growth may have slowed a little in 2012, it continued at a decent clip.
What’s more, the poorest parts of the planet are growing fastest, with important implications for poverty, and in particular for those living in extreme poverty.
Perhaps the most positive development of recent times has been the rise of Africa. Since the turn of the century things have been looking up for that long-blighted continent.
This year offered further confirmation that a self-sustaining development dynamic has taken hold, with sub-Saharan African economies heavily represented at the top of the global growth league table yet again.
In most parts of the continent and by almost every measure – health, education and quality of governance – things continued to get better south of the Sahara in 2012.
The globalisation process continues apace: Advances in the developing world are being driven by domestic factors, but access to global markets is crucial in accelerating rates of economic growth. From the worldwide figures that are available, global trade in goods and services and flows of foreign direct investment continued to grow strongly in 2012.
While 2012 brought decade-long talks on a new multilateral trade liberalisation deal no closer, there are few signs that the world’s liberal economic order is fraying. Despite the protracted nature of the economic slump in much of the developed world, protectionism is the dog that still hasn’t barked.
That the political underpinnings of a free-trading and free-investing world remain solid is particularly important from an Irish perspective. This economy’s greatest and most sustained achievement has been its ability to carve out a niche as a hub in an increasingly integrated international economy.
That success continued this year. Indications at this juncture suggest that inward investment flowed strongly again and 2012 is almost certain to mark yet another high water mark for exports of goods and services.
The ECB acts radically : The very existence of the world’s second most important currency has been in question for some time now. As long ago as the middle of last year the situation began to go critical when confidence in the world’s eighth and 12th largest economies – Italy and Spain – evaporated. From mid-2010 the prospect of either or both of these states being locked out of the bond market and then defaulting was a clear and present danger for the euro, Europe and the world economy.
After much disagreement and delay, the European Central Bank in September last finally unveiled a mechanism to prevent market panic from bringing down Spain, Italy, the European banking system, the single currency and – ultimately – the European economy.
The very knowledge that the “Outright Monetary Transactions” mechanism exists has removed much short-term uncertainty and led to one of the longest periods of calm since the crisis erupted.
The medium and longer term future of the euro remains very uncertain, but the ECB’s intervention buys time and very much lessens the chances of a panic spinning out of control.
Energy is abundant: The energy revolution did not start suddenly this year, but the advances and successes in finding new fossil fuel sources and, more importantly, finding better ways to exploit ones that we already known about, mean that the debate about energy scarcity is over.
Those who have warned that the world was heading rapidly for energy shortages have been proved definitively wrong in 2012. “Peak oil” was given a decent burial this year and its advocates have retreated into silence.
There is enough oil and gas out there to keep the Christmas lights on for the rest of the lives of anyone able to read this, a thought which may provide some comfort over the festive season.