Theresa May is reputed to be a very tough negotiator. However, she is also pragmatic and she is very well conscious that she won’t have a free hand to negotiate with the EU.
- Main /
Analyst at Saxo Bank, France
We may be wrong in believing that there is any urgency in securing an agreement in Doha next April 17th. The outcome of this meeting is irrelevant, the price of the barrel of oil will not re-establish itself immediately nor sufficiently to balance out the public finances of the vast majority of oil-producing countries.
This recovery phase is weaker than previous ones and much more disparate. Since the onset of the global financial crisis in 2007, the potential growth rate has been much lower everywhere: from 3% to 2% for the USA, from 9.4% to 7.20% for China and from over 5% to below 4% for Poland.
The oracles predicting an impending new global crisis are countless. Over the last two decades, economic cycles have been shortened due to deregulation, the financialisation of the economy, trade globalisation, and the acceleration of innovation cycles.
Following Kazakhstan giving up the pegging of its currency against dollar to devaluate it by 20%, many countries could be forced to do the same in Africa, in Asia Minor or in the Arabian Peninsula, which would lead to even more volatility on the forex.
Our main scenario is still based on a last minute agreement. Yet, time is running away and the worst case scenario of a default, which was unlikely a few months ago, seems now possible. Here's what could happen.
On the heels of Saudi Arabia, several countries have decided to increase their production to gain market share; The decline in US production is an optical illusion; The rise of Iraqi production will accentuate the excess supply in the coming years.