The business year in review: the signs of recovery

Green shoots emerged during 2013, but it was not all good news

Five years after the collapse of Lehman Brothers almost tipped the global economy into the abyss, the recovery has been slow and halting. But this year saw more signs that a corner might have been turned, as the eurozone had one of its quieter years – unless your savings were in a Cypriot bank.

Taper tantrum

Not exactly a whimper, but the big financial event of 2013 made less of a bang than anyone expected. In May, Ben Bernanke, the chairman of the US Federal Reserve, hinted that policymakers could start to unwind the massive $85bn (£52bn) per month bond-buying stimulus. Investors took fright as US stock market and bond prices plunged in the "taper tantrum". In December, when Bernanke surprised economists with a modest $10bn-a-month trimming of the stimulus, US markets soared. Or as some noted, the markets behaved like grown-ups.

US government shutdown

Wrangling over the budget is an annual Washington ritual, but this year it tipped into the first partial government shutdown in 17 years.

As many as 700,000 federal workers were sent home at the start of a 16-day shutdown that President Barack Obama said caused "completely unnecessary damage" to the world's largest economy. National parks were closed and only one person was left to man the US-Canada border, and the shutdown cost the US economy $24bn (£15bn), a loss of 0.6% of output for the quarter.

Fragile five

The emerging economies of Brazil, Turkey, India, Indonesia and South Africa were the biggest victims of investors' taper paranoia. These countries saw the value of their currencies plunge as foreign investors withdrew funds from their economies, fearing the end of cheap money. Stock markets plummeted, while India's rupee hit an all-time low. Over the summer, governments of "the fragile five" were forced to hike rates to defend themselves from market volatility. But when the modest taper did come, emerging economies were spared the worst, although analysts warned more painful times could be in store.

Bailout island

Financial reputations can also turn quickly, as Cyprus found out in March when it was forced to accept a €10bn (£8.4bn) bailout from the European Union and International Monetary Fund. An earlier deal unravelled when depositors with savings under €100,000 were hit with a levy, prompting a fierce backlash. Cyprus was the latest convulsion in the eurozone crisis, otherwise in abeyance in 2013. But the effects lingered on. Ireland became the first country to break free of its bailout, but its citizens are still emigrating in droves. Youth unemployment in southern Europe hit record levels: 58% in Greece, 57.4% Spain and 41.2% in Italy.

Slowing dragon

China's economy is too big to be affected by the taper caper, but the Politburo has been preoccupied with maintaining rocketing growth. The world's second largest economy is expected to have posted growth of 7.6% in 2013, just beating the government's 7.5% target, but far off the breakneck double-digit growth of the past. A slowdown in the expansion of Chinese factories in November confirmed those days are gone. A new set of Chinese leaders, installed in the autumn, are now attempting to switch the focus to domestic consumption, rather than just making shiny new toys for the rest of the world.

Abenomics

When economists attempt to scare eurozone leaders into action, they warn of Japan's lost decade, a prolonged deflationary slump when consumers lost confidence and hung on to their savings. Returning to power last December, the prime minister, Shinzo Abe, pledged to shake off Japan's economic malady with an unprecedented three-part economic plan to restore the world's third largest economy to health. "Abenomics" – printing money, government stimulus and structural reforms, such as raising consumption tax – has already boosted confidence. But critics fear an explosion in Japan's public debt, already close to 245% of economic output.

BlackBerry crumbles

BlackBerry used to boast that it didn't make its phones in China for security reasons. But nothing could save the Canadian company when consumers turned up their noses at its latest offering, the BlackBerry Z10. In September, Blackberry announced it was cutting 4,500 jobs, after revealing a dramatic fall in earnings. By November it had fired its chief executive and abandoned sale plans, posting a record $4.4bn (£2.7bn) loss a month later. The makers of the device, once nicknamed "the crackberry" for the way it was glued to its users' hands, had committed the ultimate tech sin: they became uncool. BlackBerry's rapid loss of ground to Samsung and Apple showed just how quickly fortunes can reverse in the tech world.

Carbon bubble

The banking crisis has receded, but the kindling for an even bigger economic crisis is still being thrown on to the fire. This was the message from a group of City blue-chip companies and Lord (Nicholas) Stern, the author of the landmark 2006 climate change report. Stern warned in May that the world risks a major economic crisis, because a "carbon bubble" worth trillions has led to the overvaluation of assets held by oil and gas companies. But a new global deal on climate change, which would curb fossil fuels and speed up the switch to green energy, remains as elusive as ever.

Doha round and round

In contrast to the painfully slow climate-change talks, the cause of trade liberalisation received a boost when governments reached a modest agreement to boost the flow of goods across borders. The deal, unveiled in Bali in December, was hailed as a lifesaver for the World Trade Organisation, which has been locked in the interminable Doha round of talks since 2001. Benefits to the global economy have been estimated at between $400bn (£244bn) and $1tn. If true, it would be welcome boost for the fragile global economy still on the mend.

Twitter float

While investors at the London Stock Exchange flocked to that old-media bastion the Royal Mail, in the US it was Twitter that had financial institutions reaching for the cheque books. On its first day of trading last month, the social media firm saw its shares rocket 73%, making instant billionaires of co-founders Ev Williams and Jack Dorsey. For some, the boom days are back.

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