2014 has been an eventful year. Crimean Crisis, rise of the Islamic State, Ebola outbreak and World Cup are just the highlights of the year.
The Crimean crisis has been long in the making. Since Ukraine’s parliament declared independence from the USSR following an attempted coup in Moscow in 1991, Russia and Ukraine have had a fraught relationship. Although separated, Russia continued to meddle in the country’s affair throughout the 90’s and 2000’s. In 2004, Ukraine’s presidential election, candidate Viktor Yanukovych was backed by Russia who ended up winning but was taken down quickly by the people of Ukraine during the Orange Revolution. In 2010, pro- Russian Yanukovych was elected again due to the failures of the opposition party. But after he cancelled a trade deal with the EU in 2013 to further build relationship with Russia, he was again driven away from office by pro-Western demonstrators in Mid-February. Russia ignored the criticisms from the Western World and attempted to take control of Crimea as well as backing separatists in other parts of Ukraine. As a result of these events, Russia was faced with sanctions, mainly aimed at its banks and energy firms. In addition Russia was also hit by the tumbling oil prices which lost almost 50% of its value between June and December. Central Bank of Russia recently intervened by increasing its interest rates to 17% as well as using some of its foreign reserves in order to stabilise Rouble which depreciated by 50% since the start of the year.
In March Malaysia Airlines’ flight MH370 with 239 passengers went missing and despite a lump of theories ranging from poor weather conditions to terror hijack, long-lasting search ended with the assumption that the plane crashed somewhere in the south of the Indian Ocean. In mid-July, Malaysian Airlines made the headlines again with the flight MH17 crashing in eastern Ukraine near the province of Donetsk leading 298 people to lose their lives. The Ukrainian government claimed that a Soviet “Buk” system was used by pro-Russian separatists to launch a surface-to-air missile. The Kremlin denied the charges, stating that Kiev should take the full responsibility as the tragedy appeared in the Ukrainian airspace. After all these tragic events Malaysian Airlines was nationalised during the year.
The rise of Islamic State was another issue in 2014. During the summer, the radical group seized many areas in eastern Syria and across northern and western Iraq with the aim of establishing a state ruled by a single political and religious leader. It is estimated that the radical group controls about 40,000 sq km area of Iraq and Syria, approximately the size of Belgium, which includes oil fields, dams and border crossings, all which affects the region as well as the global economy. The political tension puts the oil supply and trade in the region at risk thus has direct impacts on the global economy. At the same time, Israel attacked Gaza for seven weeks as a response to rocket attacks by the Palestinian militants, creating further geopolitical risks.
With the outbreak of the Ebola virus, killing more than 6,900 people in Guinea, Liberia and Sierra Leone, things weren’t looking good in West Africa either. The outburst of the virus damaged the mining, agriculture and services industries the most as borders were closed down, international flights were suspended and investors were shutting down some of the operations. According to World Bank, growth projections for all three countries are revised downwards. Guinea, Sierra Leone and Liberia are expected to grow by 0.5%, 4% and 2.2%, respectively. In addition, there were also fears whether the virus would spread to other parts of the world which lead many countries to take precautions.
Moving on to South America, Brazil slipped into recession in the first half of the year as well as hosting the World Cup despite the protests around the country as they believed money for the event could be spent better elsewhere to improve the lives of the Brazilians. Dilma Rousseff was also re-elected as president whilst one of the other candidates died in a plane crash. Things didn’t go so well for Brazil’s neighbour Argentina in 2014 either as the country defaulted again after failing payments for bond holders from the default in 2001.
More on the political side. After 11 years of serving as a prime minister, Recep Tayyip Erdogan was elected as President of Turkey despite the anti-Erdogan protests, corruption allegations and safety issues in the workplace as 300 miners were killed in an explosion whilst Erdogan was still in charge. In India, Narendra Modi was elected prime minister. Despite promising reforms on the economy and cut red tape, most of his activities have been in foreign policy. Meanwhile in Britain, Scots voted for independence which resulted with 55% of the voters wishing to remain part of the UK. More recently Shinzo Abe was re-elected as prime minister of Japan in December after the country slid into a recession.
Whilst economic recovery in US picked up pace with growth reaching 5% in the third quarter and unemployment rate falling to 5.8%, growth in the Eurozone remained weak. The ECB responded by announcing negative interest rates in June as well as an asset-purchase scheme which came later on in the year whilst FED ended its quantitative easing scheme in October after five years.
Alibaba, a Chinese e-commerce company, went public during the year and raised $25bn from its IPO on the NYSE which was recorded to be the world’s biggest IPO to date. In February, popular instant messaging app with 600million active users Whatsapp, was acquired by Facebook for $19bn whilst in the construction industry, Holcim of Switzerland announced to merge with Lafarge of France with a deal worth $46.8bn in April which will create the world’s largest cement manufacturer in sales and manufacturing capacity terms.
The Junior Economist 