Now the New Year 2016 has begun.  The first thing what business managers of corporations or heads of the organizations should do is to plan for the New Year.  As planning could start from the accurate forecast, it depends on how they predict and expect for the year.  And let me take some articles and introduce you here so it could be informative reference for your considering the business environment of the Year for your planning.

(quoted from the articles including Weekly BIZ, Sat-Sun Section Jan. 9, 2016 by HS Oh).

The Weekly BIZ interviewed famous economic experts in economy and management area, and selected 5 keywords.  These 5 keywords are introduced in the special article of the Weekly BIZ.  In the article, the risk management is very important this year, as 4 keywords out of 5 are related with the risks.  Despite the big global companies will be affected directly while the small companies affected less by the risks which is derived from the global risks, both of them should be well prepared for the risks.  Whatever they face, it is required to figure out what the keywords really mean and they should be well prepared on their own way for the risks.    

The five keywords The Weekly BIZ selected are,

‘Interest Rate Increase in U.S.', 'China Economy', ‘Low Oil Price', ‘IS(Islamic State)' and ‘Eco-Friendly Environment'

Interest Rate Increase in U.S.

The first keyword is the interest rate increase in U.S.  The view is introduced that there's possibility that it will be going down in the near future again as the interest rate has been increased in the situation the economy has not yet recovered (Professor Peter Diamond, MIT Economics)

What is the important is that it is positive side, we can say, to have the uncertainty cleared on the interest rate increase U.S. which has been uncertain from the last year.  But it is said that the speed of the increase and fund separation issue of the emerging countries should be seriously observed.

China Economy

The big shock of stock market dive in China to the global economy from the start of New Year tells that the negative influence from the China economy recession should be seriously considered.

Introduction of the article, 

“The economy structure in China is being changed.  The transition is being made from investment to domestic consumption manufacturing in China.  In this process, the growth rate of China will be reduced.” (Professor Markus Brunnermeier, Princeton University)  

“It has been observed during past 10 years that the China economy has been significantly grown meanwhile the U.S economy has been weakened.  Now the situation will be reversed.” (Tim Harford, FT Columnist)

The experts are cautiously warning on the risk possibility from the China.  The global financial crisis has been started from U.S in 2008, we can say that the risk can be started from China this time.  Particularly, the experts said there's high possibility the raw materials export countries and emerging countries in Asia nearby which have high economic dependence on China are vulnerable to the risks before the crisis situation comes to China.

Low Oil Price

It is forecasted that the low price of crude oil will be continued for the time being due to diverse reasons.  There's forecast that it will rather be going down this year

Accordingly to the article, the reasons of oversupply are global demand decrease, slowdown of China economy, failure in agreement of OPEC on reducing production, reboot of export from U.S and Iran.  And these are casting a bleak outlook on oil price as those are not problems which could be solved in short term period.

The low oil price could increase the economy growth rate, but the seriousness of the issue is being indicated by the expression that, “it is so fearful as much as I could not predict it at all,“ (Tim Harford, FT Columnist) if the oversupplying on the low demand problem will be continued as the negative effect to the global industry will be remained high.

On the contrary, it is introduced that there's forecast that oil price will be rebounded.

Introduction of the article, 

“Daniel Yergin, vice chairman of HIS U.S and David Morrison, chairman of energy sector in Wood Mackenzie, heads of the world two biggest Energy research organizations, forecasted that the oil price will be increased in the 2^nd half of this year.  Vice chairman Yergin said “the oil price will raise from the 2^nd half of this year by the decrease of the crude oil production by non-OPEC countries including U.S.” and “but the upturn trend will not be big as the possibility of agreement for the production reduction of OPEC is low.”  

Chairman Morrison said that “the U.S economy recovery and consumption promotion policy of Chinese government will make the demand of the oil will be increased 1.3 million barrels this year.” and “the fact that the shale companies are being kicked out from the market will be key factor to increase the oil price.”

Terrorist Threat (IS)

The terrorist acts of IS (Islamic States) are not limited to the area in the Middle East, it also terrifies Europe and U.S. globally.  There are considerable views that IS terror influences not only psychologically, but also economically and socially, and the economic loss is at the serious level.  

All economic activities are secured by certainty.  So there's no double that it will be warning signs for economy by reduction or withdrawal of new investment as long as the terrorist threat exists as the uncertainty of economy will be increased and the forecast possibility for the future will be going down

Only the growth in the defense industry is forecasted due to the growing needs for new technology development to cope with the terrorism as long as the risk climax from the global terrorism including IS is kept continued.

Introduction of the article, 

Professor Helene Rey, London Business School, said “after the terrorist attacks by Islamist extremists to Paris, the function of City has been paralyzed during several days due to the serious and imminent terror threats in the Brussels in Belgium which is located in the border with France.  All subway line and railway were shut down and all shopping malls, restaurants, cafés were closed.  All economy activities are stopped in the Brussels, the ‘Capital of Europe'.” and “also tourist industry in Europe has been damaged fearing the terror.  No more investment will be made if the uncertainty grows on the situation.  The situation will be worsened when the new investment could not be made upon the reduced investment in the economy slowdown already.”

Eco-Friendly Environment

Despite the low oil price era will be continued for the time being due to some factors, the environmental problem in global level and preoccupancy for future energy development are the general trend.

“The worst accident in global business world last year was cheating on emission gas by Volkswagen and the best one was Paris framework convention on climatic change.  These two accidents have the eco-friendly environment energy emerged as one of the major industry trend again which have been   stayed calm due to oil price decrease.

Experts forecast that the ‘wind power generation' and ‘solar-light power generation' has more possibility as major investment area for eco-friendly energy in the future when the energy efficiency and cost are considered.  And the paradigm shift of energy industry will drive force to expand    electric car industry.

Introduction of the article, 

Professor William Barnett, Standford University said “the emerging of eco-friendly & new and renewable energy industries are big general trend that no one can resist,” and “many corporations required to increase the investments in these area in order to survive, not just to try to react for   government and environmental organization.      

Fang Fenglei, CIO(Chief Investment Office) of CICC(China International Capital Corporation Limited) in China said “the investment area in which China interested this year is environment area”, and “government and corporations in China are making a lot of investments in this area as the business expansion in eco-friendly environment energy can contribute not only for environment protection, but also new business field for next generation in China.”

Professor Tony Seba, business management in Stanford University said “the Stone Age did not end because we ran out of rocks.  It ended because a disruptive technology ushered in the Bronze Age.  The horse-and-buggy days did not end because horses have disappeared.  It ended because the automobile with gasoline engine disrupted horses.,” and “the same process applies here that extract-resource-based energy like oil, gas and nuclear and automobile with internal-combustion engine will be disappeared into the mists of history by new and superior technologies of solar energy, wind energy, electric vehicles and self-driving vehicles.

[The translation is made based on the article in Korean.  The contents in English are subject to be different from the original expression in the interviews and/or original articles in English]