PARIS – The political clouds in the United States (US) coupled with wider climate and digital transformations point to a tricky 2020 for the world economy.
The Organization for Economic Cooperation and Development (OECD) said last month that activity had been hobbled by weaker trade and investment in the past two years, as US President Donald Trump pursued a trade war with China.
The OECD expects global growth to dip in the coming year to 2.9 percent, its lowest level since the world recession of 2009.
Trump appears to have struck a truce with China for now, under a “phase one” pact announced this month, but pre-existing tariffs remain in place and it will take time to demobilize their effects.
More broadly, the OECD contrasted proactive actions taken by central banks with the policy foot-dragging by governments in the face of climate change and the march of technology.
Industrialists and investors have to correct their climate strategies even as Trump sits firm in his policy of denial. Oil giant Saudi Aramco recently had to trim back the volume of its gigantic share offering.
The International Monetary Fund was a little more optimistic in its latest World Economic Outlook, forecasting 2020 growth of 3.4 percent but warning nevertheless of a “synchronized slowdown and uncertain recovery”.
At a time of populism and protests around the world, politics will remain an economic wild card next year.
Trump heads into the November presidential election under an impeachment cloud, and Britain’s Brexit from the European Union will likely be sealed next month, following Prime Minister Boris Johnson’s election triumph.
The rise of technological giants sitting on mountains of data is meanwhile challenging the distribution of wealth between governments and big business, and has the potential to reshape the world of work as artificial intelligence exploits that data.
The online arena has emerged as another front for Trump’s trade wars, after he threatened tariffs on France over its digital tax imposed on the likes of Amazon, Facebook and Google. Europe is threatening a collective response. (AFP)
