Who will be responsible for the economic downturn in 2019?
After the recession of the world economy last year, its development in the new one should not be expected. Before making forecasts, we will find out why the economy slowed down. The subject of discussion is directly dependent on trade. The war between the United States and China led to the introduction of taxes on the import of goods into the territory of the warring countries, and this negatively affects the economy. The greater part of the global economy is made up of transnational corporations. To predict their activities, they must focus on geopolitics while it directly depends on the statements of Trump on Twitter. Because of fears, they were forced to reduce the volume of investments in their activities, and this already led the economy to a slowdown.
The trade war has become a real problem for the economy. The United States imposed duties not only on goods that were produced in China, but also on those that have anything to do with the rival country. Along with this, the export of all countries that supply China’s export sector fell.
The decrease in investments has prevented the work of companies that produce investment demand products, which represents half of the export from the European zone to China. Trade tensions have led to a recession in global investment. The change in the export of investment demand goods from the eurozone, respectively, has bogged down the European economy, which is connected with the Russian one.
In the new year, the weakening of the conflict is highly doubtful. At least it can be expected that the signing of the first agreements between the United States and China will reduce the amount of taxes, but it is unlikely to affect the volume of investment. The stability of world trade has already been shaken, and rectifying the situation is not as simple as we would like it to be.
Despite the excitement around the trade sector, consumer spending remained high, the introduction of duties affected them weakly, as they were paid by importing companies. Buyers themselves received many jobs and increased income. As for Russia, consumption is likely to increase due to falling inflation.
Politics will remain at the center of all discussions. Presidential elections will be held in the US in November, which will be an important event for investors. They don’t know who will be the candidate from the Democratic Party and what will happen to Congress, it is not known who will be the winner. They worry about what kind of policy they will have, as it depends either on Trump or on the democrat who will replace him. Uncertainty remains in both Germany and the UK, which is leaving the EU.
Oil prices are likely to remain unchanged with minimal adjustments. The policy of the Central Bank will remain stable. Lower interest rates in the United States last year were reinsurance for trading. Disputes about negative deposit rates will continue, as they affect the economy as a whole. At the same time, discussions on cutting rates along with lower inflation are underway in Russia.
Given the behavior of politicians, the new year is unlikely to be stable. Сompanies find solutions how to cope with the introduction of duties, their increase is less and less affecting the economy. Considering that consumers remain the main audience of the economy, a slight increase in economic development is still likely to happen.