Page 29 - Abyssinia Busniess Network November 2019

Good times, America particularly hard hit. tensions are one likely source
Talk of “decoupling” and
of increased friction. Trade has
bad times “convergence” which briefly stalled with the weakening of
global demand; growth in the first
united the chattering and investor
economy are currently shrouded in classes after the global financial quarter of 2019 relative to the
a fog of international trade tensions crisis (GFC), as developing corresponding quarter of 2018
and geopolitical disputes. But, (including so-called emerging) is estimated at just 0.4 per cent.
the bigger story a decade after the economies bounced back Unilateral tariff increases by the
G20 stepped in to contain panic quickly, has gone quiet. The United States, which began in early
in markets and salvage a battered BRICS economies, which as a 2018 on specific products and have
financial system, is that growth has group saw average annual growth subsequently been extended on
failed to find a firm footing. over 10 per cent immediately a broader range of imports from
after the GFC, grew at 6.3 per China, have not helped. Retaliation
The United States is in its longest cent last year. has followed in a number of
recovery on record but it is also countries.
one of the weakest, and the impact
on incomes has been subdued.
The pick-up since the 2017 tax
cut is fading, with little sign of
the promised investment boom.
Elsewhere in the developed world,
the pick-up has been even more
short-lived. The eurozone is slipping
back towards stagnation, with the
German economy showing clear
signs of fatigue; and while Brexit
is an unwanted distraction for the
entire European economy, the United
Kingdom looks set for a particularly getting Image
traumatizing 2019.
With debt levels higher than While the impact to date has been
There is a good deal of speculation ever across the developing contained, a resumption of tit-for-
that recessionary winds will blow world, totalling around $67 tat tariff increases could prove very
the advanced economies, and with trillion, keeping interest rates costly if combined with a further
them the global economy, off course on hold would ease servicing slowdown in investment.
in 2020. Monetary normalization has pressures. But financial markets
already been put on hold by leading are fickle and under the wrong There are other dangerous currents
central banks but there are growing circumstances can turn feral; beneath these already troubled
concerns that even another round against a backdrop of rising economic waters. There is a growing
of quantitative easing will fail to uncertainty and investor anxiety, awareness that the dispute between
provide the needed boost to overall a flight from emerging markets the United States and China is
demand. to the relative safety of the less about tariffs and more about
United States could still trigger the technological ambitions of a

Whether or not pushing down on the a self-reinforcing deflationary middle-income developing country.
monetary accelerator would again spiral. Accessing foreign technology
help emerging economies is also an helped today’s advanced economies
open question. The slowdown this Not surprisingly, policymakers climb the development ladder and
year, 2019, is apparent across all everywhere are scanning the efforts to kick that ladder away
developing regions, with Latin horizon for possible shocks. by further reducing their policy
Heightened trade space will face resistance from

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