Economies and Consumers in 2016: The Year in Review
As 2016 comes to an end, we look back at some of our key insights this year. 2016 was a year when the global economy continued to grow at a disappointing pace (once more), with growth held back by an anaemic performance in advanced economies. The year has been defined by political shocks in advanced economies – firstly, the decision by the UK electorate in June to leave the EU, followed by the election of Donald Trump to the US presidency in November. Both events will continue to have ramifications well beyond their borders in 2017 and beyond.
The 2016 consumer continued to spend cautiously with expenditure increasing by just 2.4% in real terms over 2015 – well below the corresponding increase in disposable income – with consumers in Asia Pacific increasing their spending at the strongest rate. Spending in Latin American actually declined over 2015, dragged down by Brazil’s dismal economic performance and weak commodity prices.
In 2016, consumers increasingly felt pressure to make the most out of every moment, being prepared to spend money to buy time. “All natural” product features resonated with consumers and rose in importance for many, with manufacturers and retailers working to tap into these trends. Mobile first lifestyles continued to rise in importance – 58% of consumers in 2016 turn to their phones for at least five separate activities each day, compared with 34% in 2015.
Here are some of the year’s highlights from our economic and consumer trends analysis:
- The year began with our seminal publication: Top 10 Global Consumer Trends for 2016. The white paper and accompanying webinar explored the consumer trends that will reign around the world in 2016, and which are likely to influence consumer purchasing choices;
- Iran was in the spotlight in January. The lifting of sanctions is projected to boost trade and investment in the economy – oil production and exports have already rebounded quickly.With real GDP expected to grow by 3.6% in 2016 However, as our Economy, Finance and Trade Country Briefing shows, low productivity, high state intervention and accumulation of bad loans are key challenges for the economy.
- In March, China announced its new 5 year plan. In our article: China Likely to Stay a Middle Income Country we explore why distortions in credit markets, the bias towards lower productivity heavy industry and other problems such as pervasive corruption suggest that China could get stuck in its current-middle income country status for many decades.
- In June, the British referendum to leave the EU led to one of the surprise political events of the year. In the run-up to the referendum we analysed Brexit and the Implications of a Vote to Leave for the Consumer Goods Industry. With Article 50 set to be triggered by March 2017, Brexit will remain a focus of economic and consumer analysis in the year ahead.
- Brazil was in the limelight in 2016 – for some of the wrong reasons – the carwash scandal and deep recession, which has led to a halt in Brazil’s middle class expansion, but also due to its hosting of the Olympics. In spite of the many threats facing the country – political instability, recession and the zika virus – issues with ticket sales and water quality, the games were successful and showed that in the face of extreme adversity Brazil can handle two major international events in quick succession – no mean feat.
- With the Paris Agreement entering into force on 4 November 2016, marking the first time governments have entered into legally-binding climate change targets, we launched our new Natural Resources. Our data and analysis helps clients to manage and forecast costs, size business risk – and opportunities, inform CSR goals and optimise the supply chain.
- On November, another political event shocked the world with the US population voting in Donald Trump as the next president. Our Trump downturn scenario in our macro model allows clients to see the impact on the US and global economies of the impact of Trump’s trade protectionism and anti-immigration policies should they become policy. Uncertainty over the future direction of the US economy is incredibly high and our forecasts are constantly under review.
We now prepare to enter 2017 with our expert analysts identifying the top trends in Economies and Consumers for the year ahead.