Assessments vary on the outlook for the global economy in 2020, with some economists forecasting the onset of recession, whilst the IMF and World Bank are predicting another year of modest growth. However, there is broad consensus on two points: first, the overall trend is towards stagnation and a consequently increasing likelihood of recession in the next 1-2 years; second, US policy on trade and tariffs will be a key variable shaping the health of the global economy in the next twelve months.
The indicators from 2019 are not positive in this respect. There have been multiple fluctuations in the US-China trade war but few signs of a durable long-term solution emerging. The US has meanwhile extended, threatened or imposed new tariffs or sanctions against the EU, Russia, Venezuela, Iran, Cuba, North Korea and Turkey. Restrictions on trade are firmly established as the Trump administration’s foreign policy weapon of choice.
The coming year will see further peaks and troughs in the relationship with China and probably additional flashpoints with Mexico as Trump returns to the themes that won him the 2016 election. Tariffs imposed on the EU in late 2019 were rooted in a long-running dispute over subsidisation of Airbus and do not necessarily signal a wider trade confrontation. However, the European Commission taking office in November 2019 has an ambitious legislative agenda on climate change and technology regulation that will aggravate points of transatlantic friction. An election campaign in the US makes it more likely that this will trigger hostile responses.
Whilst consistently belligerent on trade, Trump has so far proved reluctant to go over the brink into military conflict. His appetite for war will probably diminish further in the coming months given a 2016 campaign pledge to reduce overseas military commitments. His wish for a foreign policy success story that can be leveraged on the campaign trail could meanwhile yield breakthroughs in relationships that are currently poor, such as with North Korea or Iran. However, the president’s tendency to emotional, personality-driven and deliberately unpredictable policy positions means that areas of apparent progress could be reversed as suddenly as they emerge.
Business metrics that are exposed to US foreign and security policy – for example through the price and supply of oil and other commodities impacted by tariffs – therefore face another year of volatility. US companies with supply chains and value linked to China and Mexico will again need to be agile. Those stalling longer-term investment decisions in countries facing US sanctions face another year of wait-and-see. In countries and regions where US commitment is perceived by local governments to be waning, the competitive advantages of state-backed companies from China, Russia and elsewhere will increase proportionately.
Sibylline Annual Forecast 2020: Global Themes
Climate change, human rights and emotive social policies will be key drivers of activism in 2020 Levels of climate change activism spiked sharply in 2019,
Right-wing terrorism on the rise but Islamist militancy still presents the greatest threat globally In contrast to some other non-state threats the recent trend among
Businesses in energy and critical national infrastructure face an increasing threat of being implicated in inter-state rivalries The world’s major geopolitical rivalries are all being
There is a strong correlation between increasing authoritarianism and weakening standards of governance and transparency 2019 was another year of friction between authoritarianism and democratic
This year’s wave of protests in Algeria, Iraq and Lebanon has inevitably triggered comparisons with the Arab Spring of 2011. The parallels have been evident
Egypt, Nigeria, Iran and Pakistan are among the large countries facing rising domestic unrest risks heading into 2020 Mass protests triggered the fall of long-standing,