I have not blogged for some time but I got new challenging job – partner at Ernst and Young – and in the evenings I was finishing a book called Gordian knots of the 21st century, should be published in English in late May, I will present it at the 40th anniversary of the Club of Rome, in Rome in early June.

There has been so much happening in the world economy since I blogged last time, but I decided to review my 2008 forecasts presented on this blog on 1 January 2008. Here they are:

Happy New Year to all bloggers from first ever blogging central bank (deputy) governor. 2008 will bring many surprises. Let me list a few that I expect:

  • Agflation will hit real bad. Our grandchildren economists will make Ph.Ds comparing monetary policy reactions to oil price shocks (oilflation) in 1970-80s to the monetary policy reaction to agflation in 2007-2009 (or even 2010).
  • World growth will remain much stronger than most people expected in late 2007, globalization of business processes made world economy much more resilient to shocks
  • USA will have first female or black president, which will mark a beginning of the new era in world politics
  • Oil will break through 100 dollars and will approach 200 (after a series of bad climate, politics, accident, positive growth surprises news)
  • Emerging markets will continue to outperform core markets, China will soar (!!!) as more and more funds will reallocate to China to reflect long-term geopolitical shift from US_Europe to China
  • China IPOs will remain world highest, and will be higher than expected
  • Asian and Middle East SWFs will continue shopping on a large scale, with particular focus on depressed western finance sector, energy sector, new technology
  • Oil exporting states and China will create special funds to “buy” best western minds (finance, engineering, biotechnology, knowledge management, etc.)
  • USA and China will embark on the first giants’ duel, and the testing field will be Iran (Chinese investments in energy sector versus Israel political interests)
  • Knowledge blogs will replace newspapers as the most reliable source of knowledge and information
  • Following Israel some 20-30 emerging market countries will produce intellectual capital reports, which will lead to better strategic decisions.
  • European Union will continue its “destructive creation”, which stands for million internally contradictory actions and lack of strategic direction.

Today’s [I have not blogged for some time but I got new challenging job – partner at Ernst and Young – and in the evenings I was finishing a book called Gordian knots of the 21st century, should be published in English in late May, I will present it at the 40th anniversary of the Club of Rome, in Rome in early June.

There has been so much happening in the world economy since I blogged last time, but I decided to review my 2008 forecasts presented on this blog on 1 January 2008. Here they are:

Happy New Year to all bloggers from first ever blogging central bank (deputy) governor. 2008 will bring many surprises. Let me list a few that I expect:

  • Agflation will hit real bad. Our grandchildren economists will make Ph.Ds comparing monetary policy reactions to oil price shocks (oilflation) in 1970-80s to the monetary policy reaction to agflation in 2007-2009 (or even 2010).
  • World growth will remain much stronger than most people expected in late 2007, globalization of business processes made world economy much more resilient to shocks
  • USA will have first female or black president, which will mark a beginning of the new era in world politics
  • Oil will break through 100 dollars and will approach 200 (after a series of bad climate, politics, accident, positive growth surprises news)
  • Emerging markets will continue to outperform core markets, China will soar (!!!) as more and more funds will reallocate to China to reflect long-term geopolitical shift from US_Europe to China
  • China IPOs will remain world highest, and will be higher than expected
  • Asian and Middle East SWFs will continue shopping on a large scale, with particular focus on depressed western finance sector, energy sector, new technology
  • Oil exporting states and China will create special funds to “buy” best western minds (finance, engineering, biotechnology, knowledge management, etc.)
  • USA and China will embark on the first giants’ duel, and the testing field will be Iran (Chinese investments in energy sector versus Israel political interests)
  • Knowledge blogs will replace newspapers as the most reliable source of knowledge and information
  • Following Israel some 20-30 emerging market countries will produce intellectual capital reports, which will lead to better strategic decisions.
  • European Union will continue its “destructive creation”, which stands for million internally contradictory actions and lack of strategic direction.

Today’s](http://www.ft.com/cms/s/0/c26d3436-1d96-11dd-983a-000077b07658,s01=1.html) brings news that option prices reflect market expectations that oil will reach 200 dollars and agflation hit real bad (rice, corn, soya, food export protectionism, food futures ban in India). Obama is heading for presidency, world growth holds pretty well, and China is still above 10% trend, SWFs shopping accelerated, situation in Iran is “complicated”. Some of my my forecasts did very well so far and we shall see whether my other forecasts materialie by the end of this year.

I am convinced now that structural changes necessary to restore commodity markets equilibrium (investment and innovation in energy sector, higher yields and bigger sowing areas net of climate disasters) will take much longer than expected and we should brace for a long period of high energy and food prices. I do not exclude food and energy crises in some parts of the global economy, especially when blackouts become daily life not only in Sout Africa, but in many other countries as well.

Anyway I think that some of my forecasts that were clearly otuside-the-box ideas in January this year (such as oil priced at 200) now seem to be gaining support in the markets. I also predicted that after “few” years technological innovation will take the price of oil down to 2 dollars.