In 2019 we saw some incredible events passing by, leaving the world in confusion. What can we look forward to in the new year and the coming decade? Here is a summary of global developments per continent so that we know what to expect in global economic growth.
A Global Vision of Long-term Growth
Europe’s economy is being put to the test this year, but will nevertheless experience growth. Strong economic and labor market growth in Central and Eastern European countries will compensate for poor economic growth in Germany and Italy. Trade agreements with Japan, among others, will give the economy a boost, but the continuing uncertainty about the Brexit and the American tolls on European steel and aluminum are causing an economic deterioration.
Germany is expected to have economic growth of 0.5% and Italy even only 0.1% in 2020. Both countries do not intend to take drastic measures, as there is still growth and no economic growth crisis. Other Western European countries all have economic growth of between 1 and 2% in 2020. Economic growth in Central and Eastern European countries is expected to be above 2% and in some countries even around 3.5%, but due to conflicts between some Central and Eastern European countries, increasing international restrictions, aging population and ending financial support and plans, economic growth is uncertain.
North America and the Caribbean
The countries of this region will also maintain strong ties with countries around the world in 2020, but external factors can put the international economic relations of the countries to the test. The entire continent will grow, but there will be major differences between countries.
The United States will have a 1.9% growth in 2020, which is a clear decrease from 2.6% in 2019. This is partly due to a contraction in the labor market and consumption, but also due to weakening in investments and on the financial market. The persistent tensions between the United States and China are also bad for trade and also push the US dollar to high values on foreign markets.
Canada has an economic growth of 1.7% in 2020, which is a small decline compared to 2019. The main cause is the weak energy sector in Canada, but on the other hand, Canada has also concluded a good trade agreement with Europe regarding trade with. On the contrary, it makes Europe cheaper because there are hardly any taxes on export and import products.
Mexico does take a step forward in economic growth compared to 2019 and goes from 0.9% growth to 1.9% growth. The increasing problems in the energy sector had a negative impact on the economy in recent years, as did the continuing political tensions. In spite of that, the Mexican government has achieved its objectives of 2019 and according to the World Bank, this is causing a growth in the economy.
The Caribbean has the largest growth of this region with an average of 4.1% in 2020, but regional growth can be hampered by high unemployment, sovereign debt, little financial support and the high vulnerability to environmental and weather-related problems. just like the ongoing political tensions. In spite of that, the Mexican government has achieved its objectives of 2019 and according to the World Bank, this is causing a growth in the economy. The Caribbean has the largest growth of this region with an average of 4.1% in 2020, but regional growth can be hampered by high unemployment, sovereign debt, little financial support and the high vulnerability to environmental and weather-related problems.
Asia is entering a strong economic period but may have to cope with a few blows with the possible Brexit, the United States-China tensions and constantly changing capital flows. Asia is still expected to have the largest economic growth on the continents despite shrinking in recent years.
In the past year, the economy has mainly shrunk regionally due to external and internal disputes, such as trade tensions between the United States and China. Imports in several regions have increased while exports have contracted.
In the Pacific region, economies are based on strong consumption and investment. That is why economic growth in this region will be supported by increasing cooperation between the various countries in the economic field and digitally. Regional trade agreements will play an important, central role in this. China will have 6.1% economic growth in 2020 according to the World Bank, but this growth will depend on developments in trade tensions with the United States.
These tensions could not only negatively affect China, but the entire global economic market. South Asia will shrink in terms of international trade and development, but economic growth will still be 7% in 2020. Southeast Asia will have an increase in imports in 2020 due to good financial conditions, increasing capital and low inflation. The growth of this region will be around 5.3% according to the World Bank. The Brexit is a major threat to the economic growth of South Asia and Southeast Asia, as these countries often have strong ties with the United Kingdom. Just as in recent years, the Pan-Asia region has experienced stable growth of 2.8%.
Central and South America
Major economic growth is expected in Central and South America in 2020. Financial security through agreements and laws is still central, also because of the high government debts. Furthermore, the market must become more open to trade and investment by foreign companies. Despite these steps, economic growth will be 2.5% for the region. The poor economic growth of 2019 was mainly due to challenging conditions and temporary factors.
Brazil, the largest economy in South America, had declining economic figures for 20 weeks in 2019 due to political uncertainties, and only after they had been resolved did the economy pick up again, but further adjustments are needed to maintain an economy to have growth. Chile, Colombia, and Peru will all have a growth of around 4% in 2020, but then all three must be able to continue the developments they are going through. Argentina and Venezuela will not be experiencing economic growth in 2020, because the governments of both countries have not yet got their debt under control and have not taken any clear steps to get it done.
A large amount of political and geopolitical tensions in the Middle East create dangers for people, but also for the economy. Oil production and export is what this region relies on most in its economic growth, but is also very dependent on fluctuating oil prices. Despite these uncertainties, the World Bank estimates economic growth at around 3.2%. Also because a large number of countries in the region have invested heavily in infrastructure in recent years, there is an increase in non-oil related activities, which in turn generate income.
But nevertheless, the countries also suffer from worldwide tensions, such as between Iran and the United States. Iran suffered a loss in 2019 because the United States had imposed sanctions, but also due to poor oil exports and spending cuts. This loss will be converted in 2020 into a small profit of 0.9% according to the World Bank. Just like this year, Iraq will experience the largest economic growth of the region in 2020, mainly due to the increase in oil production, but also due to benefits in the non-oil related sectors. Saudi Arabia and Dubai have two major global events in 2020 – Expo 2020 and G20 Summit – that will boost their economies for that year but possibly also for the years to come. Syria and the surrounding countries will continue to suffer from the ongoing war that anger in Syria and Syria is also unlikely to have economic growth in 2020. The countries located in North Africa, such as Egypt, will have a major economic growth of 5.8% due to developments in the tourism sector and an improvement in infrastructure.
In Africa, economic growth is mainly concentrated in the urban parts of the countries, with the benefits not passing on to the rural areas of Africa. The growth in Africa depends on its economic diversity, modernization, and good raw material prices during the year. There may also be dangers in the debts that some public authorities have.
The economic growth is in all likelihood around 3.3% according to the World Bank. Here, growth is dependent on the recovery of oil production from major producers, increased investor confidence and strong growth in non-commodity intensive sectors. Many of these factors were a reason for poor economic growth in 2019, but the uncertainty surrounding the United States-China trade, low commodity prices, high borrowing costs, drought, persistent poverty and uncertainty in national security were other factors affecting the economy in Africa deteriorated.
Examples of economic growth and opportunities can be found in recent years from the continent’s three largest economies – Angola, Nigeria, and South Africa. Angola has experienced good economic growth since 2016, in addition to focusing on its oil sector, also developing in other sectors. On the other hand, Nigeria is still very dependent on their oil production, and because this production was very low last year, there was high unemployment, terrorist threats, and corruption, economic growth was not very good, but not as bad as that of South Africa. The persistent problems in that country led to low economic growth in 2019.