2020 – Where does the economy go?

Problems and opportunities from the 2 largest economies in the world.

The US is expected to close the year 2019 with growth of 2.3% and still maintain growth around 2% next year.

China is still expected to maintain growth slightly above 6% this year, but it should fall to around 5.7% next year.

As the “war” must continue, even if the powers reach an agreement called “step1” we must have as a consequence:

• Less purchasing power from China;
• Possible decrease in the value of the main commodities acquired by it;
• China’s lower investment capacity and possible postponing of the 2025 project, which aimed to dominate China’s world trade this year by controlling major ports and modes of transport in Europe, the US and Latin America;
• Leaving step 1 comes back from buying US commodities;
• Continuity of transfer of foreign industries in China, in particular American, to other countries, which is a great opportunity for Brazil to attract them;

The US will face an extremely divided election period.

The President trying to keep jobs, wages and growth, to ensure his reelection and the opposition trying to obstruct whatever is possible.

Despite this, growth will be enough to maintain jobs.

In foreign trade, however, we must have huge clashes, because if the agreement with the North American countries, ie Canada and Mexico, would generate more job creation capacity and more balance in the US trade accounts, however, would be an unwanted victory by the Democrats for Trump.

On the other hand, so far, Trump has not delivered an improvement in the country’s trade accounts, which could bring him political losses and perhaps lead to unwanted further trade retaliation, probably with Europe.

Key opportunities are in attracting outbound or outbound industries from China;

Occupation of spaces left by China in the American market;

Increased exports of commodities to China and other products that are most likely to be constrained by trade “war”;

“Auction” of investment opportunities coming from both countries.

World economy

Overflight from other countries, we have a modest growth of Europe as a whole, a crisis of decisions between the humanitarian aspect and the need to maintain minimum demographic growth, accepting immigrants from different parts and the budget limitations for this poorly organized immigration.

In Latin America we have political crises igniting several countries like Bolivia, Ecuador and Chile.

The return of the left to some countries such as Argentina and probably Colombia, where conservative governments generally failed to address the damage done by previous governments in time and failed to gain the patience of the population to achieve the results.

This will lead to a drop in world growth, which at best should be less than 3%.

Brazil

Despite the insecurity and discredit in Brazil resulting from the Supreme Court guaranteed the impunity of the corrupt and demoralized for having “seized the power” of the country and a congress still used to act in their behalf, defending their own interests not of the voters, it looks like it is expected to grow by about 1% this year, with possibilities (in Brazil it was said, until the past is uncertain) back to grow by over 2% next year, compared with almost 4% of recession in the year, in the last leftist governments.

Companies with the domestic market having only a modest recovery, should internationalize and seek the world market to grow again.

By Carlo Barbieri