The Financial Times was more right than wrong about 2016 — superficially, at least. Of the 16 predictions on this page a year ago, nine or 10 came good (depending on whether or not the popularity of Pokémon Go means that 2016 was “the year that virtual reality takes off”).
Some predictions stand out: Roula Khalaf was prescient on Bashar al-Assad’s awful resilience, John Paul Rathbone had the timing of Dilma Rousseff’s downfall just right, and James Kynge nailed renminbi depreciation (he’s calling it the other way in 2017 — perhaps our most out-of-consensus forecast for next year).
But we got the big ones wrong. The UK did not vote to remain in the EU, Hillary Clinton did not win, and that is what mattered most. Anyone who believes that what matters to history are not the steady trends but the sudden seismic shocks received powerful confirmation for their view in 2016. So readers might look at our 2017 prognostications with disdain.
There is, furthermore, something to be said for the increasingly popular view that political and economic predictions are always and everywhere a waste of breath. Certainly, our most famous political pundits and economists, as good as they may be at explaining things after they have happened, struggle to do so beforehand.
It should be said that there is a disciplined and empirically grounded way to make worthwhile predictions — as the political psychologist Philip Tetlock has described in these pages. It involves making multiple precise predictions, assigning them specific probabilities, keeping score and doing careful postmortems of the ones that miss (even this method often stumbles when it comes to highly liquid markets, such as currencies or stock markets).
What FT experts are doing here is looser and more binary. Sceptics will conclude this makes our annual predictions an exercise in folly. Perhaps — but there is value here beyond prognostication. Each of the predictions that follow is a concise summary of what a seasoned journalist thinks are the pivotal issues for the year ahead, and the factors that will make them break one way or the other. They are fabulous intellectual stimulants, whether or not they work as fortune-telling. So read on, enjoy and reflect.
Those who put stock in predictions, and merely think that the FT is bad at them, can (for the first time) have a go at doing better themselves. Pick your answers to the 20 questions below, plus the tiebreaker and submit your (real) name and email. The winner will have a prominent place in next year’s prediction feature.
Will Article 50 be triggered by the end of the first quarter?
Yes. The pressure on the prime minister Theresa May to get on with leaving the EU is reaching breaking point. All of the government’s Brexit plans are based on the Article 50 letter being sent by the end of March. External events could delay it: the Supreme Court ruling on the Article 50 process in January, for example, or politicking in the House of Lords. But barring a crisis, the Brexiters’ Christmas wish will very soon come true.
Sebastian Payne
Will Marine Le Pen win the French presidency?
No. The probability is not zero, of course. What if the disenchanted working class, low-skilled youth and the 10 per cent of the population that is unemployed turn out en masse? And what if, meanwhile, leftwing voters shun the runoff round of the election because they oppose François Fillon’s market reforms? Still, a Le Pen victory remains unlikely for one reason: she is advocating a return to the franc, and for a
country of savers, that is too much of a gamble.
Anne-Sylvaine Chassany
Will Angela Merkel win re-election in Germany?
Yes. Ms Merkel will win the autumn German parliamentary elections, but with fewer seats for her Christian Democrat/Christian Social bloc. Despite the horrifying Christmas market attack, voters will swallow their misgivings — no more major attacks follow. With the rightwing Alternative for Germany likely to enter the Bundestag and the liberal Free Democrats expected to return, coalition-building will be harder. But Ms Merkel will manage.
Stefan Wagstyl
Will the Iran nuclear deal collapse?
No. Donald Trump has threatened to pull the US out of the deal, but that is more easily said than done. Even if the US withdraws, the nuclear accord, signed by Iran and six world powers and enshrined in a UN Security Council resolution, will stand. A Trump administration, however, can still undermine the deal by raising fresh pressure on Tehran to the point where Iran withholds its compliance. So it is possible that the deal begins to unravel in 2017, but expect the other signatories — namely Russia, China, France, the UK and Germany — to work hard to contain the damage.
Roula Khalaf
Will Donald Trump and Vladimir Putin do a Syria deal?
Yes. But it will not be worth the paper it is written on. The Syrian government’s retaking of Aleppo leaves Mr Trump with almost no leverage with Moscow — even if he were inclined to use it. Mr Trump’s goal is to attack Isis and to be seen doing so. He and Mr Putin will strike a deal within the new US president’s first 100 days to launch a joint offensive against the terrorist group. Mr Trump will get his Twitter headlines. Syria will continue to burn.
Edward Luce
Will President Trump build the Mexican border wall?
Yes — but not much of it. President-elect Trump has made such a fuss about barricading the 2,000-mile border that he needs to do something. He recently, however, turned promises of an “impenetrable, physical, tall, powerful, beautiful southern border wall” into talk of a fence. So expect some symbolic additions along the border — a third of which has some kind of barrier already.
Jude Webber
Will Isis be destroyed as a significant global force?
No. The self-declared caliphate of Islamic State in Iraq and Syria will collapse in 2017. But once it is driven out of its urban strongholds in Mosul and, eventually, Raqqa, it will mix local insurgency with international terror assaults. The analogy is the way al-Qaeda was able to regroup in the Syrian desert after its near-death experience in Iraq in 2007-2009, storming back as Isis five years later. Isis can count on external powers to act as recruiting sergeants: Shia-backed regimes in Damascus, Baghdad and Beirut will keep Sunnis alienated. We will still be talking about Isis in 2018.
David Gardner
Will Jacob Zuma remain president of South Africa?
Yes. The scandals that have beset Mr Zuma’s presidency are stacked high. In many democratic systems, they would have sunk him already. But he has devoted much of his presidency to ensuring his own survival, subverting state institutions and loading ruling African National Congress structures with acolytes dependent on him for patronage. So he will survive as president, at the cost of deepening splits within the ANC and a diminishing chance that one of his allies will be the new president in 2019.
William Wallis
Will North Korea successfully test a nuclear-capable missile?
No. Following two nuclear bomb and more than 20 ballistic missile tests, the country has the rest of the world worried. It is a position that Pyongyang probably enjoys. But a nuclear missile test next year? A step too far. It would cross an international red line. At a time of increasing volatility in the US, Pyongyang does not know how far retaliation might extend.
Bryan Harris
Will China allow its currency to devalue by more than 10 per cent?
No. Pressures are building on the renminbi to depreciate against the US dollar after sliding by more than 6 per cent during 2016. Capital is surging out of China in spite of efforts to dam it in. The property market is cooling fast and US dollar interest rates may rise again. And yet the renminbi will not suffer a rout next year. It will hardly depreciate at all. Everything in China in 2017 will be about stability ahead of the key congress in November — so Beijing will hold the currency steady.
James Kynge
Will Venezuela default on its debt?
No. Default would see creditors seize oil cargos, ending the inflow of petrodollars and thus the patronage that buys the corrupt government its support. Caracas’s willingness to pay its debts is thus never in doubt. The recent rise in oil prices means its ability to pay has also improved.
John Paul Rathbone
Will the UK’s annual growth rate fall below 1 per cent in 2017
No. Growth will indeed slow as the reality of an imminent hard Brexit becomes clearer. But momentum will carry the economy through. The average of forecasts in the December Consensus Forecast was 1.3 per cent. This brings it very close to the Office for Budget Responsibility’s 1.4 per cent. Both look reasonable as central estimates. But the forecasts vary between 0.6 per cent and 2.7 per cent. This range is not surprising: the uncertainty is huge.
Will the Fed funds rate be higher than 1.5 per cent at the end of 2017?
No. The answer turns on whether Donald Trump’s fiscal plan can deliver the promised 3-4 per cent growth. But the measures the Republican Congress will accept may not be enough to offset headwinds such as demographics and weak productivity. The US Federal Reserve will provide the three rises it has forecast, getting the rate to 1.5 per cent, but it will not need to go higher.
Michael MacKenzie
Will the S&P 500 finish the year above 2300 (roughly its current level)?
No. Valuation-oriented investors — this writer included — have been bearish for years. Their scepticism has cost them dearly. Donald Trump’s election has changed three things, though. It has driven a very expensive market up another 5 per cent in anticipation of fiscal stimulus that may disappoint. The dollar is surging higher, which will hurt the earnings of US exporters. Finally, bond yields have risen. Bulls say stocks must be expensive when yields are low — an imperfect argument, but if it works, it must work both ways.
Robert Armstrong
Will oil finish over $50?
Yes. Record levels of Opec production and resilient supplies from outside of the cartel kept pressure on prices in 2016. A production cutting deal among big producers gave oil a year-end boost. Whether countries stick to it, and US shale oil production levels, will determine 2017’s prices. Energy officials remain resolute in their view that prices are still too low to enable investment. Expect the industry to keep its nerve, and prices to rise.
Anjli Raval
Will EU inflation be 1.5 per cent or higher by year end?
No. This is not a forecast of eurozone economic woe, but one of another unspectacular year. Inflation has risen from 0.1 per cent in June to the latest estimate of 0.6 per cent in November. It will keep rising as past falls in energy prices drop out of the 12-month calculation, but probably not far enough to tip it over the 1.5 per cent rate. The European Central Bank will again have to admit it has failed in keeping inflation below but close to 2 per cent.
Chris Giles
Will Apple be the most valuable company in the world at year end 2017?
Yes. The easiest way for Apple to lose its crown is a Saudi Aramco flotation. The oil company has an estimated value of more than $2tn; Apple’s market capitalisation is a bit over $600bn. Many analysts are gloomy about Apple’s prospects, but this is priced in already. There are no new gadgets expected in 2017, but a tax cut on repatriated cash could reinvigorate the stock. If Saudi Aramco stays out of it, Apple should remain number one.
Tom Braithwaite
Will Uber go public?
No. Uber has more than $10bn in its war chest. It is busy settling lawsuits, building driverless cars and selling autonomous freight trucks. Oh, and flying cars. Why, then, would Uber bother going public? And with $2bn in losses during the first nine months of 2016, the income statement is not pretty. Boss Travis Kalanick likens Uber to a student who has just entered ninth grade and still has a few years before the prom. It won’t graduate in 2017.
Leslie Hook
Will either Goldman Sachs CEO Lloyd Blankfein or JPMorgan Chase chief Jamie Dimon step down in 2017?
No. Mr Blankfein and Mr Dimon look secure. Both have been treated for cancer in recent years and have returned to work. And they seem to love their jobs. Although President-elect Donald Trump dangled a political appointment in front of Mr Dimon, the latter did not bite. At Goldman, Mr Blankfein’s number two was the one wooed by Mr Trump, and Gary Cohn jumped at the chance. Mr Blankfein is not going anywhere.
Brooke Masters
Will a major European bank fail in 2017?
Yes, if failure includes being bailed out by the government, having losses imposed on bondholders through a bail-in, or some combination of the two. Many European banks are still overshadowed by bad debts left from the last crisis, and a sluggish European economy is doing them no favours. Italy’s Banca Monte dei Paschi di Siena all but secured a state bailout in 2016. Others hovering near the brink include Spain’s Banco Popular, Portugal’s Novo Banco and even the UK’s Co-operative Bank.
Martin Arnold
Tiebreaker question for the online prediction contest: how many Grammy awards will Beyoncé win this year?
Beyoncé has been nominated for nine: record of the year, album of the year, song of the year, best pop performance, best rock performance, best urban contemporary album, best rap performance, best music video and best music film.