The IMF sounded a note of cautious optimism in their quarterly economic outlook, supporting our most recent figures from the International Business Report. Global growth is expected to come in at around 3% this year with advanced economies improving but some developing markets weakening.
The parlous state of public finances around the world and the uncertain impact of the oil price fall are concerns, but Big Data provides an opportunity to revolutionise the business world, as explained below.
The IMF Fiscal Monitor says that public finance risks around the world remain elevated due to high debt and low inflation, although there is no single solution for economies in obvious distress.
However, the drop in the oil price provides a 'golden opportunity' to reduce energy subsidies in developing economies, as government expenditure could be shifted to more productive investment areas for long-term growth, such as health and education. In advanced economies, the IMF wants to see governments use this fiscal space to raise energy taxes (especially on carbon-emitting production) while lowering employment taxes, which it cites as some of the most detrimental to growth.
The broader message stressed the importance of macroeconomic stability for growth. The IMF advises economies to build up "fiscal buffers" in good times through the use of "automatic stabilisers" - for example, unemployment benefits, which are a lower fiscal burden in good times and vice versa. For mid-market businesses, this message in particular will ring true; taking on an extra employee or investing in a new piece of machinery is a bigger commitment (relatively speaking) compared with a larger enterprise.
More than 90% of the world's data has been created over the past two years, an amazing and perhaps terrifying fact. The problem we have is how to sift through it all to find solutions to the world's most pressing problems.
The good news is that Big Data is increasingly providing an evidence base for better interventions. One example is Better Work which uses sensors to track the activity of over one million factory workers around the world. The data collected is sold to big brands to boost supply chain integrity and to factories themselves to help design and implement codes of conduct. It is also provided to governments and researchers to help design interventions and improve public policy outcomes.
Business leaders should actively be looking at how data streams could help them better manage supply chains, better forecast fluctuations in demand and improve productivity. The information is increasingly available. The key is cutting through the Big Data to find the 'Big Indicator' to unlock a company's potential for growth.
The World Bank is expecting a sustained period of low oil (and other commodity) prices. Whether this is good news or bad news depends very much on whether an economy (or business, for that matter) is a net exporter or importer of commodities.
Some of the regions hardest hit are the Africa, the Middle East and Latin America, where the profitable export of natural resources to China and other rapidly growing economies has fuelled economic expansion over recent years. Sub-Saharan Africa alone has seen its growth forecast shaved by 0.6% due to the oil price drop. The wider issue for these economies is how much their fiscal position relies on oil revenues. For countries such as Venezuela or Angola, where oil accounts for more than three-quarters of tax revenue, the price drop is a major concern.
By contrast, oil importing nations have been presented with an economic gift. India has seen inflation fall rapidly and is now expected to be the fastest growing major economy in 2015. East Asia is expected to grow by an additional 0.4%. How these economies capitalise on this improved position will be crucial to their long-term development.
In South Asia, an estimated one third of the population have no access to electricity, so removing energy sector distortions is a priority. Encouragingly, India and Indonesia has moved to withdraw costly fuel subsidies (which tend to benefit the better off) but it remains to be seen whether this windfall will be spent on the education, governance, ICT and transport infrastructure these economies need.