After a year in which macroeconomic concerns and geopolitical factors affect the global business world, it is likely that the 2020 outlook will not differ. Actions such as the presidential elections in the USA and the killing of Qassem Soleimani in 2020 will trigger economic fluctuations in dozens of tensions that we witnessed in 2019 and dozens of countries that almost every country in the world have experienced.
The good news is that global economic growth is expected to increase in the later days of 2020. Both the International Monetary Fund (IMF) and the World Bank expect a total growth of just over 3 percent or just below the gross domestic product (GDP).
This expectation is slightly better than last year, mainly thanks to the more loose monetary policies of the world central banks. However, as the IMF warns in its latest report, downside risks dominate the outlook.
There are many variables such as weakness of emerging markets, trade wars, and amazing debt swamp of the world. The dominant oil sector will continue to fight whims. There is little consensus among energy experts on estimating raw prices, an estimate in the $ 60-70 range is no surprise.
In the hours after the death of Soleimani in Baghdad, oil rose to $ 68 with a 3 percent increase in global markets with the fear of countries producing oil to experience difficulties in exports. However, oil prices had been stabilized at pre-attack levels, with tensions between the US and Iran not causing trouble in oil supply.
Lower prices mean less income for oil producing countries, less economic freedom, more uncertainty in growth forecasts and more deficits.
The main reason why the price of oil is so difficult to predict is that the factors that affected the global economy throughout 2019 and still exist at the beginning of the New Year (such as the trade war between the USA and China) goes its third year. Mutual tariff change decisions taken between the two countries will continue to affect the uncertainty in global trade and economic activity.
At the end of 2019, there were signs of ceasefire that President Donald Trump agreed to reduce some tariffs in exchange for China’s purchasing more American-made goods agreement. But. there is no guarantee that this “first phase” agreement will continue. Because Trump also has to keep the American people’s attention tactically up to date with the presidential election. On the contrary, it is thought that US-China relations may deteriorate significantly in 2020 despite the positive initiative that emerged at the end of 2019.
Trade wars for the Middle East could potentially increase crude oil trade to the rest of China and Asia, especially as the US is self-sufficient in crude oil. A trade volume for oil sales to the east affects the negative effects on global production and trade. Is it more accurate to protect existing balances or to be in search of new ones?
Meanwhile, the US can continue commercial hostilities with EU and European economies on goods ranging from aircraft to wine and cheese sales.
Considering the British general election majority maintaining Brexit at all costs in 2020, Europe faces a tough year in every situation.
The British Prime Minister Boris Johnson has not yet signed an economic agreement between the government and the EU. Regardless of the outcome, it is difficult to see how it will benefit European economies.
Other major global economies also face one-year uncertainty. Argentina is struggling with large budget deficits and depreciation economy, developing countries are heavily affected by financial vulnerabilities, and Japan is still struggling with decades of low growth and deflation heritage.
In the Gulf, The Gulf Cooperation Council (GCC), the economic policymakers in the region are facing forces that diverge. On the one hand, while there are big projects to be financed, governments are aware that after 2014 oil price collapse, after years of steady growth and austerity, public spending should pay attention.
International economic markets play a role in the global economic scene as usual. World exchanges enjoyed a decade of almost unprecedented growth in financial history.
The global and regional economy faces significant challenges next year. Policymakers hope that unfortunate decisions by leaders will not make these problems any more difficult.