My predictions for 2006 are a little bit different than what you’ve read from Michael, Mitchell, and George. I want to present to you what are, in my opinion, the top 8 international economies to watch over the coming 12 months.
So, without further adieu, here they are (in no particular order):
Germany — With Angela Merkel recently being sworn in as the new Chancellor of Germany, this economy is facing a lot of change over the next year. Unemployment continues to be a major problem in this, the largest EU economy, and Merkel has her work cut out for her to gain support of leaders and consumers to ensure that Germany’s economic recovery is on track in 2006.
UK — Prime Minister Tony Blair has a lot of work to do in 2006. Consumer debt in the UK is out of control, the real estate market is softening significantly, and retail sales are slumping, except in very high end markets. In addition, Blair’s recent announcements during his six-month presidency of the European Union, which ended on Tuesday of this week, didn’t win him or Britain many friends in the EU. Blair needs to rally his nation’s population to ensure domestic spending continues, and he needs to reach out to his EU allies to ensure trade relations do not negatively impact the UK economy.
Brazil — High interest rates have continued to cut consumer spending in Brazil, leading to the slowest economic pace in nearly two years. As it stands right now, Brazil has a whopping 18.5% benchmark interest rate, which represents the highest in the world. President Luiz da Silva is going to have to cut interest rates drastically or pray for a miracle in 2006 to turn around a stagnating manufacturing industry, stalled consumer spending, shrinking agricultural production, and a floundering currency.
USA – A new Chairman of the Board of Governors of the Federal Reserve (Ben Bernanke), a softening real estate market, a weak dollar, massive government and consumer debt, and an interest rate yo-yo will make the U.S. economy fascinating to watch in 2006. Consumer spending will continue to slow, and, in turn, the U.S. economy will suffer as a result. I’ll be watching very closely here, especially since so much of the global economy depends on a strong American economy.
United Arab Emirates — Over the next seven years, global analysts expect this area to attract $160 billion in foreign investments. New laws offer global investors the opportunity to invest in Abu Dhabi businesses and real estate for the first time in history. After the death of United Arab Emirates Founding President Sheikh Zayed last year, new leaders in Abu Dhabi are now well on their way to changing the economic destiny of the region. Individual and corporate investors are expected to jump at the opportunities, and the growth potential of businesses and properties in the region may be worth a closer look in 2006.
India — Many economists say India is the “new China,” and I have to agree. Multinational companies are moving operations to India in droves thanks to the population’s talents and the fact that labor there is so cheap, and the economy will see the benefits of such corporate strategies. The stock market in India is booming, the retail sector is anticipated to be hot next year, and the World Bank expects the country’s economy to grow by 8% in 2006. Clearly, a lot of economists will be watching what happens in the New Year in India.
Japan — The Nikkei has risen to a five-year high. Gross GDP rose 1.7% on an annualized basis last quarter. Consumer spending has strengthened and continues to rise. Housing starts are rising. Consumer confidence is up. Toyota is expected to be the top global automaker next year. Things are starting to look up, way up, in Japan, and I can’t wait to see what 2006 brings this nation. Of course, there are still no guarantees to Japan’s economic comeback, but you can’t deny that the environment for growth is looking positive.
Canada – As the only nation in the G8 countries with a budget surplus, not to mention a booming oil and gas industry, Canada really is the country to watch in 2006 — and what do you know, it happens to be the country I call home! A strong dollar, a stronghold on mining and precious metals, and confident consumers make for great potential for the Canadian economy next year. The country’s national election in early 2006 should also make for some interesting media coverage, considering the political scandals 2005 brought the nation. All things considered, the Canadian economy, and in turn the Canadian dollar, will likely continue to experience strong growth in 2006.
With drama like this on the international economic stage, who needs reality TV? I, for one, can hardly wait to see what happens for the eight nations I’ve listed above over the next 12 months. With some predictions bullish and some bearish, 2006 will surely prove to be an exciting and interesting year for the global economy.
Stay tuned to PROFIT CONFIDENTIAL over the coming days, weeks, and months to ensure you stay on top of all the news that could affect your bottom line in 2006. Michael, Mitchell, George and I remain committed to sorting through the financial news to tell you what it means to you where it counts… in your pocket!
Happy Holidays and Best Wishes for the New Year from all of us at PROFIT CONFIDENTIAL.