From Russia's economic collapse, the threat of deflation, and another year of record low interest rates, here's how crisis beset the world economy once again
The global economy: a story secular stagnation?
2014 did not prove to be the year the world roared back to the path of recovery. Global economic output grew by just 3.3pc, an expansion that was dubbed by the IMF's chief economist as “mediocre and worse than forecast.
The outlook for 2015 doesn't look much better. The probability of the world falling back into recession - defined as GDP growth of 2pc or less - is only around one in 100, but much higher for the advanced world according to the Fund. The IMF thinks there is now a four in 10 chance the eurozone area will slip back into its third recession since the financial crisis next year.
This raft of bad news has led many academics and observers to put weight behind the theory that the ageing west is now facing a period of 'secular stagnation' characterised by persistently weak demand and almost non-existent growth.
The world economy had a new bogeyman in 2014: deflation .
Falling prices dragged on growth prospects in the advanced world, triggering fears the west is succumbing to the path Japan fell into during the early 90s.
Deflationary forces proved to be particularly acute in eurozone where inflation has fallen to record lows. Falling prices are most dangerous in highly-indebted countries as deflation increases the real value of debt burdens, while encouraging people to delay their spending. These concerns were enough to prompt a stock market correction in the autumn which saw global indices temporarily crash and the FTSE 100 experience its biggest one-day sell-off in almost a year and a half.
The collapse in oil prices was one of the factors that contributed to low inflation in 2014. The price of Brent crude has plummeted by nearly 50pc since June, prompting fears that a barrel could even fall as low as $20 in 2015 . Falling fuel prices have acted as a global tax cut for the world's consumers but threw a number of the world's major producers into crisis, none more so than Russia.
In December, a combination of low oil prices, the conflict in Ukraine, and sanctions on Vladimir Putin's government, saw markets take fright. The result was a precipitous fall in the value of the rouble and a midnight interest rate hike to 17pc to help halt the decline. The Russian economy is now set to contract by 4pc in 2015, its first recession since 2009.
2014 also saw the debate about capitalism and its discontents come to the fore with the work of 'rockstar' economist Thomas Piketty.
The Frenchman saw his book, Capital (Other OTC: CGHC - news) in the 21st Century (Shenzhen: 300078.SZ - news) become a New York Times bestseller and generate argument and counter-argument about the dynamics of wealth distribution in modern capitalism.
The chart above, based on calculations from Piketty and his colleague Emmanuel Saez, has been described as the most important chart of the year . Produced by economist Pavlina Tcherneva, it shows that for most of the post-war period, the income gains from economic expansion went to the bottom 90pc of the population in the United States.
In the last three decades however this trend has switched to the extent that almost all of the income growth has been captured by the top 10pc of the US population.
= Monetary policy: When central banks did a lot but not much at all =
It was another year when the world's policymakers relied on the actions of central banks to support their flagging economies.
But despite some pockets of good news, most central banks continued to delay any normalisation of monetary policy. The Federal Reserve, Bank of England and ECB kept rates at their record lows as weak inflation and anaemic growth alleviated the need for tighter monetary policy.
Janet Yellen at the Fed is likely to be the first to raise rates in 2015, with markets expecting the Bank of England to follow suit with hits own hike around October.
Meanwhile, it was the race to the bottom in Europe, where the ECB moved to impose negative deposit rates, and the likes of Sweden and Switzerland cut their main policy rates to rock-bottom.
6. Abenomics reloaded: Japanese QE will dwarf the actions of any other central bank
Monetary policy activism was not just confined to interest rates. 2014 was the year the US ended its revolutionary asset-purchase programme of QE3. But the mantle was soon picked up by the Bank of Japan which announced it would embark on the most radical experiment in global monetary policy ever seen. Under the second arrow of the country's Abenomics reforms, Japan's central bank will begin buying assets worth up to $700bn a year in a bid to finally release the country from its low-growth trap.
Despite calls for Europe to follow suit, Mario Draghi and the ECB’s governing council remained divided on the need for sovereign bond purchases in the single currency area.
But markets will remain expectant in 2015. The chart above became the most watched gauge in the eurozone this year . Measuring market inflation expectations for five years from now and ending in 10 years time (or the '5-year 5-year forward inflation rate'), the measure dropped off a cliff in the autumn. Inflation expectations are now lingering at near-record lows placing further pressure on Mr Draghi to embark on QE in a bid to stave off Europe's disinflationary crisis.
= Europe: the crisis returns =
After a period of reasonable calm, 2014 saw the return of fears about the break-up of the single currency. Sluggish growth, flagging demand, and low inflation dogged the monetary bloc this year, with fears of a recession spreading beyond the supposedly 'weaker' members and to the eurozone's 'core'.
Germany, so long the Continent's erstwhile economic powerhouse, expanded at a slower rate than France in the third quarter of 2014. The country's central bank has now halved its projected growth forecasts for 2015, expecting GDP to expand by a paltry 1pc.
Greece is causing headaches for Europe's policymakers once again . The new year could well see the election of a new Greek government, with polls indicating the radical Left Syriza will become the biggest party in the country. Headed by the charismatic Alexis Tsipras, Syriza have vowed to defy the terms of the country's bailout agreement, causing markets to start betting on Greece being the first member state to leave the euro.
For all the belt-tightening that has been imposed on the country, Greece's economy remains nearly 25pc smaller than it was in 2008, and has the highest debt mountain in the euro-area.
One of the reasons Greece and its southern European peers have struggled to get back on their feet is due the chronic imbalances that have continued to exist in the 18-member monetary union.
The gap (NYSE: GPS - news) between the euro-area's creditors and debtors has actually widened since the crisis, according to Standard & Poor's. Spain, Italy, Greece, and Portugal will owe a combined €1.85 trillion by the end of 2014. Meanwhile the top-three creditor nations in the euro - Germany, Belgium and the Netherlands - will see their net external assets rise to €2.36 trillion, from €343bn a decade ago.
= Britain: writhing in agony and ecstasy =
The UK spent most of the year as the fastest growing economy in the G7. But, for all good news about growth, the paradoxes of the British recovery were surmised by the chief economist at the Bank of England, Andy Haldane who dubbed the economy as " writhing in agony and ecstasy ".
Along with strong headline growth numbers, rapidly falling unemployment represented one of the high-points of the government's economic promises in 2014. The economy generated more than three-quarter of a million jobs this year, with those people unemployed for under six months reaching a record low. Overall joblessness also fell to 6pc from 7.2pc at the start of the year.
On the agony front, revisions to the way we measure our public finances meant the Britain's debt burden grew to £1.4 trillion, £127 billion bigger than first calculated by the Office for National Statistics.
The UK's 'jobs rich but tax poor' recovery also means the deficit will continue to be the main sticking point for George Osborne in the run up to the 2015 general election.
Despite the Government's pledges to balance the books, borrowing in 2014 was still above the previous year's peak, with weak income tax revenues and poor productivity proving to be a main thorn in the government's side.
= We're still getting plenty of things wrong =
For all the predictions, 2014 was yet another year we still managed to get most things we thought we knew about the world economy wrong. The chart above shows the extent to which the IMF has been overshooting its predictions about the global economy for the last three years.
The Fund admitted it has been consistently over-optimistic in its projections in its twice-yearly World Economic Outlook, as it under-estimated the extent of the woes in the eurozone and overshot growth in emerging economies.
If the recent history of the Fund's outlooks shows it prone to over-optimism, its latest predictions will leave many hoping that undue pessimism is now the order of the day.