Globe WorldWatch

Next year's diary


What happens next? Wouldn’t it be nice to know what events and surprises will end up filling those pristine blank pages in your 2013 diary? Professional forecasters (or ‘futurists’ as they prefer to be known) will tell you that the one thing you should never do with the future is predict it – but here at WorldWatch we know that the temptation to forecast the future is irresistible (and as Oscar Wilde said, the only way to get rid of temptation is to give in to it). It may be that not everything we forecast in our 2013 diary will come to pass, but some of it surely will …

The year to come is 2013 - or is it?

The year to come is 2013 – or is it? Of course, 2013 is only one way of numbering history. According to the Hebrew Calendar the year is 5773/4, while the Hindu faith offers no less than three competing calendars, so you can take your choice of a start date between 1935, 2069 and 5114. And if you are unlucky enough to live in North Korea, the year is only 102 (that’s the number of years since the birth of Kim Il Sung, who despite having been dead for 19 years is still drawing his salary as ‘eternal president’ of the DPRK). Quite by chance it is also year 102 in Taiwan, where years are numbered from the establishment of the Republic of China by Sun Yat-sen. Just to increase the confusion, in the People’s Republic of China the traditional Chinese calendar tells us that after the Chinese New Year on February 10, the year will be either 4710, 4650, or 4711, depending on which epochal numbering system is used. Maybe easier just to remember that it is the Year of the Snake.

The so-called ‘fixed element’ associated with the snake in Chinese mythology is fire. But what does fire mean for 2013 futurology? Fire can destroy, but it can also transmute, purge, and renew. There are more than enough parts of our world and economy vulnerable to the raging fires of history. But 2013 may see also see some welcome renewal.

Fire in the Middle East. In Iran there remains the threat of that fire that is like a thousand suns: 2013 is the year when Iran is expected to acquire an offensive nuclear capability – according to Israeli Prime Minister Benjamin Netanyahu, who is very likely to keep power after the January general election. The question of whether Israel will launch an attack on Iran’s nuclear facilities will grow ever more pressing, although the answer is still likely to be ‘no’ – the US opposes it, the Arab revolutions have reduced Israel’s political elbow-room, and even Israel doubts such an attack would be effective. What will happen is that a new political pattern will emerge, after Iran says goodbye to the increasingly unpopular Mahmoud Ahmadinejad in the presidential election due in June. One reason to expect no military move against Tehran is that neither Israel nor the US nor their allies want to add to the instability generated by the civil war in Syria: our forecast is that dead or alive, Bashar Assad will have been driven from Syria well before the end of 2013 (it is difficult to read the momentum of the revolt any other way). If he survives he might flee to Russia, or to Iran – there will certainly be no home for him in Egypt, whose President Mohammed Morsi will be visiting the US some time in 2013, no doubt hoping to repair his image as the Middle East’s international statesman – and as the mood of revolutionary disappointment hardens in Tunisia, Libya, and several Gulf States, regional statesmanship will certainly be needed.

Winter in the West. There will be little sign of fire in the western economies during 2013: the fiscal cliff (nominally to be reached on the last day of 2012) is only the first of a long line of critical issues for the US economy (the federal government debt ceiling will also be reached in February, and fraught negotiations over taxes are likely to continue through the year). What will be the outcome of this ‘spend less’ versus ‘tax more’ argument by the end of 2013? For the answer, use the futurist’s golden rule: never gaze in the crystal ball when you can read the book of history. US taxes will rise. Meanwhile, in Europe it will be worse: 2013 really is the crunch year for the Eurozone, intensified by elections in Germany in September (be astonished if Angela Merkel does not win) and in Italy quite possibly in February (be astonished if Silvio Berlusconi succeeds in making a comeback). And above all by renewed crisis in Spain: Spain will have to borrow a whopping one fifth of GDP in 2013 just to keep government afloat (and banks will require more). If Germany does not agree to some form of mutualisation of Eurozone debt before the end of 2013, it is difficult to see the currency union holding together.

A Policy Spring. Meanwhile, something will be happening in the world’s central banks in 2013. In Europe, the year past has already seen an undramatic but fundamental turnaround in policy, when in July ECB President Mario Draghi finally accepted the need to intervene in government bond markets. In 2013 there will be more: final agreement on ECB bank supervision is likely in February, and by the end of the year expect the Bank to be ready to recapitalise Eurozone banks directly (although maybe too late for Spain). In Japan, incoming Prime Minister Shinzo Abe has already made it plain that he expects the Bank of Japan to turn about face and use every tool in the book to reflate the economy and weaken the yen; expect a replacement for Bank of Japan governor Masaaki Shirakawa in April when his current term ends. Upper House elections in July will also shape the new political dispensation – if Mr Abe’s LDP repeats its Lower House gains, the new pro-growth policy-set will acquire more momentum (and we suspect Mr Abe may even row back on the plan to raise consumption taxes by year-end). Change too at the fusty Old Bank Lady of Threadneedle Street in June, when Mark Carney arrives from Canada to become the new governor of the Bank of England; Mr Carney has already hinted at a more growth-oriented policy at the BoE.

Art, antiquities and teargas. Museums don’t often make the news: one that has recently and will again in 2013 is the Cairo Museum, holder of one of the world’s great collections of treasures (including the gold artefacts from Tutankhamen's tomb). The Museum just happens to be on the edge of Tahrir Square, the epicentre of the continuing Egyptian revolution and rioters have already broken in at least once. In 2013 the Egyptians will be reviving their feud with the rival Egyptian Museum in Berlin, which houses one of the greatest Pharaonic artworks, the bust of Nefertiti. Naturally, the Egyptians want it back.

The Germans don’t agree and – provokingly you might think – are planning a special celebration of all their holdings of objects associated with Akhenaton (Nefertiti’s husband). Go before April 13.

On the other hand, don’t worry overmuch about the ambitions of Egyptian Islamist firebrand Murgan Salem al-Gohary to begin work on destroying the Giza pyramids in 2013 (Napoleon had the same idea, but after about ten years he gave it up as an impossible job). For those Egyptologists with a taste for the macabre, don’t miss the British Museum’s offer of an interactive virtual autopsy of an Egyptian mummy (ends March 2013), and for investors with a bearish view of the world, the BM also has an exhibition of art associated with financial bubbles and crashes (it continues until May, which of course is the traditional month to sell equities). Lastly, some very welcome news: on 14 April the Rijksmuseum in Amsterdam will re-open after a ten-year refurbishment, ready to show off its peerless collections of Vermeer and Rembrandt in the style they deserve.

Those are just glimpses of 2013: we suspect that the real theme will be more climate change, in global politics as well as global weather. Let’s hope that means a bit less storm, and a bit more sunshine. After all, 2013 will be the year when the price of solar power crystals could finally fall to less than a dollar per watt of capacity (thirty years ago the price was over $15). That’s the kind of fire we would like to see in the Year of the Snake. And we could all use a year in the sun.

Important Information:

Nothing in this document constitutes or should be treated as investment advice or an offer to buy or sell any security or other investment. TT is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA).

If you would like information on TT’s products, please contact:

Receive our insights

Sign up to receive regular investment updates and insight about products that interest you:

Sign up now