The Global Economy 2020: A Positive Outlook Shadowed by China

particular sectors such as global manufacturing and U.S. agriculture, the consensus outlook for the global economy next year is surprisingly sanguine.To get more china national news, you can visit shine news official website.

Most mainstream forecasters expect that the worst of the storms are past, and they are expecting global growth to rebound: the International Monetary Fund by 3.4 percent, the World Bank by 2.7 percent. One big reason for the dose of optimism is the generally looser approach to the money supply taken by central banks around the world, which helped offset some of the pain of trade wars and falling investment in 2019 and promises to allow a modest rebound next year (but which carries its own risks).

But those growth expectations are premised, in both cases, on a couple of potentially tenuous foundations: a rebound in emerging markets, such as Argentina and Turkey, that have been hammered in recent years, and a halt to further nasty surprises like trade wars, imploding markets, debt time bombs, and the like. Economists expect the wild cards for 2020 to point in one direction: downward.

“[D]ownside risks seem to dominate the outlook,” noted the IMF in its latest big report on the global economy’s prospects. Whether it’s still-simmering trade tensions, the ongoing Brexit saga, China’s economic transformation, worries about a sharp market correction, central banks with few bullets left to fire, historically massive piles of debt, or the usual geopolitical risks that could upend the best of projections, here is a look at some things to keep an eye on that could make or break the global economy next year.
Despite the preliminary agreement between the United States and China of a “phase one” trade deal that promises at least a cease-fire between the world’s two biggest economies, the trade wars are far from over. That “phase one” deal with China isn’t yet a done deal—and similar agreements have come undone in months past.

Even if U.S. President Donald Trump and Chinese President Xi Jinping finally ink some sort of truce that will see a partial restoration of trade amity between the two countries, most of the tariffs the Trump administration imposed on China (and those Beijing slapped on the United States in return) will remain in place. What the Peterson Institute for International Economics calls a “new normal of high tariffs” will mean that about two-thirds of Chinese imports to the United States and more than half of U.S. exports to China will remain taxed at relatively high levels. That means a guaranteed, continued drag on U.S. manufacturers that rely on many of those goods as inputs for their own finished products, adding financial pain for firms, consumers, or both.

And trade tensions aren’t limited to the fight between Washington and Beijing. With a new NAFTA wrapped up and an apparent China truce in hand, Trump’s trade negotiators are returning their gaze to ongoing trade fights with Europe, which include ongoing spats over U.S. tariffs on European steel, U.S. tariffs on European goods due to the Airbus-Boeing dispute (with potentially another set of European retaliatory tariffs in the pipeline), and U.S. tariffs on French goods in response to a controversial French digital tax—a tax that is under serious consideration in several other countries and that could spread that trade fight even further.

There’s more: The United Kingdom will formally exit the European Union at the end of January, but that will only sound the starting pistol for the really heavy lift: negotiating a free trade agreement between the U.K. and Europe before the end of the year, a deadline that European officials feel is almost impossible to meet. Failure to sort out key issues, such as tariff rates between Britain and the continent or regulatory standards between the two sides, could lead to another Brexit cliff edge at the end of the year, with all that entails for new investment, business and consumer confidence, and growth.

To make things more interesting, the United States hopes to negotiate its own free trade deal with the U.K. next year. But that would mean pulling Britain closer to the United States in terms of economic regulation—making it that much harder for the U.K. to close any meaningful deal with Europe.

Ultimately, greater trade tensions between big economies, coupled with the end of the World Trade Organization’s ability to resolve disputes between countries, could mean a return to relatively fettered trade, with countries slapping tariffs on imports at will. The World Bank warns that a return to higher duties across the board could be as devastating for global trade as was the great financial crisis a decade ago.