The Oil Crisis.
The drop of over 50 percent in oil prices will not only bring financial problems for many producer countries, but will also have financial repercussions for States such as Texas and North Dakota as well as the market for ‘junk bonds’. It could also lead to geopolitical effects of significant magnitude. It is unlikely that the Maduro regime in Venezuela (Chavez successor) will remain as is until the end of 2015. This has already had an effect in Cuba, where things could begin to change after the announcement of President Obama just a few weeks ago. In Russia things are not looking that great either. The Ruble was devalued by 78 percent in the second half of last year, dragging down the Russian economy again.
The threat of the 1998 crisis lurks again, which although its epicenter was in Moscow, its effects were felt around the world. Now this could be even more critical since the ongoing conflict with Ukraine.
Elections in Greece will take place on January 25. This could detonate another round of uncertainty in the Euro zone. As the polls now suggest, Alexis Tsipras might become the new Prime Minister of the country. The Syriza party controls parliament and speculation regarding possible Greek abandonment of the euro will return, not because it is the will of the party that can win elections but because the program rejects austerity and repudiates the debt. This could lead to a complication in the permanence of Greece in the euro area.
What could happen is still unknown, but it would certainly be an additional factor of instability in the international financial system.
The rising interest rates in the US and UK.
Although there are some who are already predicting a rate hike until 2016, a large majority of specialists predicts it will be this year.
The US dollar has risen against all major currencies: the Euro and Yen have dropped by 12% against the dollar and the Chinese RMB has fallen by 2.4%. Greater demand for the dollar by investors reflects their expectation that interest rates will rise in the US. If this proceeds in a rugged rambled way, it will send signals that will create uncertainty among investors and international volatility may be accentuated and thereby hitting the currencies of emerging markets, including the Mexican Peso.
Even though this is not around the world but right here in the country, the following could be also a cold, that could develop into pneumonia.
Hostility in Mexico´s electoral process
What happened a few days ago at the election of the President of the Supreme Court is perhaps a symbol for the division that exists in the country and will probably be expressed in the elections. At election time, parties tend to emphasize their differences over their similarities. Given Mexico´s recent experiences, that fact could exacerbate the sense of chaos that prevailed in the last quarter of last year, which could result in slowing the pace of the economy.
Let´s hope none of this happens. That elections in Mexico end in a peaceful matter that interest rates do not go up this year, that oil prices recover and Russia and Greece will not trigger another crisis.
Sources: El Financiero / Enrique Quintana / BBC Business
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