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A peek at 2014 through Economist crystal ball

More countries than before expected on its 'Most Risky List'


BIG shocks, big shifts and big shows are lined up on the world's calendar next year, the executive editor of The Economist predicts.

These three trends emerged in a crystal ball-gazing exercise with Daniel Franklin, who casts 2014 as a year of political upsets, economic rebalances and sporting excitement.

With 40 per cent of the world's population headed into voting booths in the coming year, elections look set to change the lay of the land in politics, particularly in the large, emerging economies of India, Indonesia and Brazil. Mid-term elections will also play out in the United States, as will the parliamentary elections for the European Union (EU).

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Mr Franklin said that incumbent governments are in a shaky position in some of these countries, and fringe parties have emerged and could do well. In India, for instance, firebrand opposition leader Narendra Modi could become the country's next prime minister.

"He is undoubtedly a controversial figure and will certainly shake things up in India," said Mr Franklin.

The political and social unrest that erupted this year in countries such as Brazil and Turkey is likely to spill over into the new year. The Economist expects more countries than before to make it to its 2014 "Most Risky List", a ranking of social-unrest hotspots.

"The reasons for this are many, but include the impact of the austerity and recession, as well as dissatisfaction with mainstream politics," said Mr Franklin.

Major shifts are also likely on the economic front next year, with a lot of good news expected to come from the rich world rather than the emerging markets.

"Since the economic crisis (of 2009), the rich world has been in huge trouble and the emerging world has been the dynamo (of growth). Now, a number of emerging economies are experiencing a difficult period - and this is certainly true for places like Brazil and India," Mr Franklin suggested.

But the US economy is doing better. It is tipped to do well next year, helped in part by its banking system remaining resilient to shocks from the eurozone.

Japan's prospects for the year also appear brighter, boosted by Abenomics; even Europe is growing, albeit slowly.

Interestingly, another factor working in favour of the US economy's resurgence is the emergence of shale gas as a major energy source. Mr Franklin said that besides making a difference to the cost of production in the US, it will make the US a net energy exporter - zipping ahead of Russia and also Saudi Arabia as the world's overall largest energy producer, taking into account both oil and gas.

This will trigger knock-on effects in the US economy and provide a psychological boost to the country's overall resilience.

The Economist expects that investment interest will rediscover the rich world as an attractive destination, rather than send funds into emerging markets. This will be important for countries such as Singapore, which is very sensitive to trends in global trade, he said.

The magazine predicts that Singapore will grow by 3.8 per cent next year, as a resurgence among the advanced economies bump up global trade volumes, even though Asia may slow down.

Topping the list of big sporting shows next year is the football World Cup hosted by Brazil. Russia will host the Winter Olympics and Scotland, the Commonwealth Games.

Mr Franklin believes that while the Winter Olympics will be Russian President Vladimir Putin's opening to showcase his country to the world, all eyes will be on Brazil's big event. Cynics have questioned the samba nation's ability to host the event - not least because of its poor infrastructure and social unrest - but Mr Franklin is confident that the South American nation will be able to pull it off.

He is, however, doubtful that the country's success with the World Cup will be enough to save Brazilian President Dilma Rousseff's job when the country holds its elections next year - even if there may be some economic returns from the huge investments the country made to host the soccer extravaganza.

Mr Franklin, also the editor of The Economist's World in 2014, was in Singapore to host and speak at a gala dinner to launch the publication.

Asked for his tip on who will win the World Cup next year, the Briton confidently predicted that England - no surprises here - will lift the trophy.