SUMMARY

  • Will the 20s Roar?

Recent retrospectives have noted that we closed both a year and a decade on Tuesday. The 2010s turned out to be far more prosperous than almost anyone could have hoped, given that the scars of the global financial crisis were still visible ten years ago. The global economy enters the new decade in a much stronger position than it began the last one.

But progress has been uneven. Some countries and some communities within countries have not advanced much over the past ten years, leaving them frustrated. This has contributed to a swing in politics and policy that threatens the foundations of global economic progress. Our fortunes over the next ten years will be shaped critically by how these forces evolve.

As of this writing, trade uncertainties have diminished modestly. There is hope of détente between China and the United States, and there was no abrupt Brexit at the end of the year. But there remain myriad trade tensions around the world that will continue to hinder exporters and global supply chains. We'll be watching developments in this area closely.

The following themes will also warrant attention in the year ahead:

  • Policy Rotation. Ten years ago, central banks were the only game in town. Today, by contrast, they may have reached the edges of their effectiveness. Very low global interest rates create an opportunity for intelligent fiscal policy to have maximal effect. We'll be watching to see whether countries take advantage of this opportunity.
  • Global Unrest. A number of protests have broken out in different parts of the world amid increasing income and wealth disparity. While markets haven't reacted strongly, the world's many hotspots have the potential to create macroeconomic instability for both emerging markets and advanced economies.
  • Political Volatility. Elections in Germany (in 2021) and the United States will be telling, and political movements in many places are questioning the value of global cooperation. If international bodies like the World Trade Organization and the International Monetary Fund cannot fulfill their missions, risks to markets will rise.

Our forecast calls for continued global growth in 2020, at a rate that is modest. That may seem unexciting, but it might be the best we can hope for.