The economy in 2020 is exciting, but at the same time, crucial for multiple markets. Growth on the global scale is predicted to bottom out. But, the growth in 2020 would be towards global growth consolidation, rather than a complete recovery in all aspects. These are loosely built on
- The turns in the tech cycle, worldwide
- US-China trade tensions
- Macro policies
- A declining USD
There is a caution based on the re-escalation of the US-China tensions. Also, the slowdown of the Chinese economy may worsen putting out more danger, along with a credit crunch on a global scale.
If the ECB and the FED decide to run their economies hotter than earlier, 2020 may be a watershed year. Let’s look at the trends concerning major markets:
The pace of the US market growth is expected to follow the slow form it has been taking, throughout the first half of the year. The national election is coming up and at the same time, there are real tensions between the US and China. The uncertainty factor as far as the business environment and economic policies remains higher. But at the same time since the consumer fundamentals are strong, inflation might not pick up as high as expected by the Fed.
The GDP growth of China is expected to go at a slow pace below 6%. 2019 was a tough year, but 2020 is expected to remain the same. Growth stability and financial stability are going to be a challenge for one of the biggest markets in the world. The slowdown in the growth has been continuing because of some reasons such as rising bond defaults, fiscal condition, lesser property investment, etc.
The growth of the Eurozone is expected to be below trend and the inflation might not touch the target in 2020. There are multiple signs of stability, which might slowly crawl the economy towards inflation. The UK has left the EU on January 31 and there will be uncertainty for quite some time regarding the trading relationships with the European Union.
The phase of the economic slowdown has ended thanks to the rebound of the tech industry. But there are some structural drags in the major economies overseas which will probably hinder significant acceleration in growth. The monetary policy is in a deadlock, but there will be good support from a proactive fiscal policy in the form of spending associated with the public sector.
Since the domestic credit conditions are tighter, the growth of India is set to slow down during the final quarter of the year. The GDP growth is expected to be on the downside again at 5.5%. In the close term though, the prediction of inflation given by the RBI might be overshot, owing to the food price inflation and supply-side shocks. The RBI might ease in the second quarter of the year however more weight is on the fiscal policies to result in growth.
Thailand is expected to come out with a GDP growth well below the potential, at 2.7%. Indonesia has some uncertainty in the structural reform implementations and it needs to be cautious of the macro policy mix in the shorter term. In the Philippines, there could be a V-shaped growth that is backed by more powerful public investment and an overall strengthening of the domestic demand.