The Global Economic Outlook of 2020
The Global Economic Outlook is a report released by the International Monetary Fund (IMF) twice a year. This report analyzes the economic development around the globe and policies affecting its development either positively or negatively. It also highlights improvements in the financial markets in the world, economic systems in place and projects what’s happening in developed and developing countries along with the issues affecting global economic growth.
After taking a turn for the worse in the year 2018, global economic values are still not showing any signs of recovery. Trade wars and tension between geopolitical zones have been one of the driving forces that have made the future of global trading seem so uncertain. This has affected businesses; investments and the manufacturing sector seem not to be picking up any space. And since the Chinese economy is neck-deep in debt with the crazy exchange rate among other concerns, the chances of a policy compromise with China is pretty slim at best. The only ray of hope has been the increase in the accommodation of monetary policy. This has somehow softened the after-effects of all the trade wars and geopolitical tensions on financial markets.
In Europe, Australia and Asia, the cost of the supply chain is increasing thus affecting demand and less and less money is spent nationwide. Much of this is believed to be a direct result of President Trump’s issues with Asian and European trade partners.
And some external factors that have a hand to play in global economic growth are the sharp contrast between economies of some developed and developing countries, world poverty, global warming poor financial market movement and depletion of some natural resources.
In April 2019 the IMF report projected deceleration in economic growth due to factors affecting major economies after the steady growth in 2017 and the first quarter of 2018. The global growth was projected to be 3.6 per cent in 2020. On July 18, 2019, the IMF projected global growth forecast to be 3.2 per cent and picking up 3.5 in 2020
Global growth in 2020 is anticipated to slow to 3.4 per cent. 2020 is expected to be an economically hectic year. The thing that would have made a very positive impact on the economy would have been a trade deal between the United States of America and China but that seems far-fetched due to President Donald Trump’s anti-globalization agenda and the fact that the war is less about just trade discrepancies and more about economic and tech dominance. So, any deal that happens is most likely to be short-lived and have no long term positive impact on the global economy
Countries that are most likely to take the brunt of the 2020 economy downside are China, mainly due to its trade war with the USA alongside Japan and Germany because their economy is solely dependent on global supply chains. And although consumers may shield the USA economy, it is expected to be affected by the 2020 economic growth too. India will be a victim.
Regionally speaking, the economic growth in the Caribbean and Latina America is expected to be 2.5% in 2020, encouraged by a rebound in fixed investment and private consumption. Mexico is expected to pick up a healthy 2%, With brazil and Argentina 2.5% and 3% respectively
If Turkey can pick up space and central Europe experiences a private consumption rate boost, Regional growth in Europe is projected to top 2.7% in 2020. Growth in the Western Balkans is expected to rise to 3.8% in 2020.
With the recent boost in the growth of oil exports, there is an anticipated rise of 3.2% in Africa. Among oil-importing economies, increasing growth is predicated on policy reform progress and healthy tourism prospects. Growth in South Africa, Angola and Nigeria is projected to be 1.5%, 2.9% and 2.2% in 2020
But while 2020 may continue to look bleak, growth is expected to rise in 2021 to a per cent of 2.8 due to progressive global finance situations and a slight come back in rising markets of developing countries. But the emerging market and developing economies (EMDEs) development continues to be inhibited by subdued investment.
With a high level of risks, EMDE is anticipated to grow to a healthy 4.6 per cent in 2020-21 making room for further trade wars. It is therefore important and advisable for the EMDE to implement policy buffers and bring about reforms that will boost growth.
The stock market has risen to an all time high at the tail end of 2019, and there seems to be some indication that corporate debt levels are a bit too high. In addition, investment into high-growth tech companies seems to be slowing as private investment shifts toward profit. This is an initial good sign that investors are slowing down the pace of capital chasing far off returns.
In addition, web-based businesses continue to be optimal even with monopolistic dominance coming from Facebook and Google. There may be SEC investigations that take hold in 2020 to try and break up these companies. Programmatic advertising companies like Rubicon Project and Newor Media should continue to see strong growth through 2020. Whereas marketing channels like Facebook may become too expensive given that it is a competitive election year in the U.S