Rebound or recession?
The year 2019 was a difficult one for the global economy, as geopolitical uncertainty and a slowing Chinese economy combined to trigger a global manufacturing downturn. The global economy grew at 2.2% in 2019—the slowest rate in a decade—and this lacklustre performance is set to continue in 2020. Because of the impact of the coronavirus outbreak, the Economist Intelligence Unit expects global growth to reach only 2.1-2.2% this year. Continued political instability internationally and in many countries—will limit any pick-up in business confidence and investment, and the balance of risks to the outlook remains tilted to the downside.
Along with the increasing risk of widespread COVID-19 pandemic, trade related issues remain the biggest threat to our growth outlook. While the immediate risk of a further escalation in the tariff wars between the US and China has diminished, trade tensions between the two biggest economies of the world will remain high until at least the US presidential election in November—the outcome of which is still highly uncertain.
While the global outlook remains clouded, we expect the Asia-Pacific economy to expand at a faster rate than any other region in 2020-24. Growth will be supported by comparative political stability, high rates of saving and investment, and a rapid rate of urbanisation as the region’s emerging economies continue their shift away from low-productivity agriculture towards manufacturing and services.