Another year passed, the last teen year of this century. The world witnessed many memories – good, bad and ugly. As part of this year end issue, IE continues highlighting ten major happenings in 2019. The annual caveat still holds – it is just a list and NOT THE top ten list. So, with this preamble, here are the ten events that had (in my humble opinion) the most widespread repercussions globally over 2019.
Trading more accusations and protections than goods
Globalisation took quite the back step in 2019. Trade tensions and manufacturing recession saw the weakest growth rates around the world in a decade.
The USA-China trade tension, Brexit, Korean trade wars… and overall disillusion with globalisation and income inequality are all causing countries to look inward and be more protectionist.
India pulled out of RCEP amidst concerns around its sagging economy, manufacturing weaknesses and import dumping.
The US has been the main instigator. Though the main publicised dispute (on a massive scale) is with China, there are several open fronts – including with India. Others include EU, Turkey, Russia, Brazil and France.
In the US, after several contentious public and private discussions, the US-Mexico-Canada (USMCA)trade agreement took the place of the former North American Free Trade Agreement (NAFTA). The US also announced a phase 1 deal with China just in time for a holiday gift.
It is easier politically to blame someone else than address key policy and structural concerns in one’s own economy.
India rising – but not steady
India’s growth rates have been slipping badly for six quarters. The latest forecasts predict rates between 4.5 and 5.5 per cent.
A confluence of events has come together for the perfect storm – oil price rises and fiscal management, increase in trade concerns (whether it is with the US, RCEP) and slowdown in traditionally strong sectors (automobiles, telecom and IT).
Socially and politically, there is lot of energy and time spent on issues like the abrogation of Article 370 on Kashmir, women’s safety and more recently, the Citizenship Amendment Act. There have also been some significant political losses for the BJP (Maharashtra and Jharkhand). Valuable time and resources have been spent on regular elections neglecting other urgent needs.
Achieving a $5 trillion economy is pretty much impossible at the low growth rates and so some tough measures are needed. India is a messy democracy and consensus never exists. Anything can be stopped, rolled back or delayed – causing undue impacts with cost escalations or lack of benefits (be it for a train shed, a rail line or a road).
The story is not always one of doom and gloom.
Several amazing things are happening in several sectors and the venture capital funding scene has been quite good this year.
It appears that Britain will leave the EU in 2020. The UK Parliament just ratified the latest proposal by Prime Minister Boris Johnson and blessed by the EU. The British Pound widely fluctuated, several companies started pulling out of planned investments, the legislators were publicly ridiculed for their inability to plan and execute Brexit.
Boris Johnson was thrust into the PM post in July 2019. He almost wore down the EU leaders into accepting the latest deal which will allow the UK to sign trade agreements independently. After the transition period, UK is expected to be fully out of the EU by the end of 2020. Just a year left to see how this all pans out for UK.
China – when many breathed fire on the dragon
China hit by multiple issues in 2019 – a long trade war with the US, slowdown in domestic growth and exports, protests in Hong Kong and leaks on the treatment of Uighurs.
China’s growth hit a 27-year low after been having long average double-digit growth. China leapfrogged exponentially with technology, infrastructure, venture capital funding and social evolutions. All of these have masked some underlying tensions within their own population and the outside world.
Growth rates haven’t slowed and a small per cent growth of a large volume is still quite meaningful. Other countries like Vietnam have started making hay while that sun shines. India has a good opportunity to grab some of these – especially when it comes to addressing size and scale.
The 20th anniversary of Macau returning to China and its success in avoiding the HK-style protests is an interesting contrast.
China’s massive central spending, the opaque nature of finances and bad debts, and worry about the cooling property market that sustained many an improvement in peoples standards of living – are all causing concern.
The year of the uprisings
The reasons are varied, but 2019 saw an amazing number of civil protests around the world – pretty much in every continent. In the US, early in the year, there was the continuation of the #MeToo movement and the disgusting behaviour of powerful people like Harvey Weinstein and Jeffrey Epstein. However, the second half of the year saw a tremendous rise in these protests – and not always in a positive way. Some (like in Iran) have seen lots of human casualties and others have significant economic impacts.
In Lebanon, planned taxes on petrol, tobacco, and internet calls like WhatsApp, led to mass protests and blockades and led to the resignation of Prime Minister Saad Hariri.
In Iran, with US-led sanctions and a weak economy, a planned fuel price hike brought out the disenchantment with the government and religious head and led to mass uprisings.
In Ecuador, years of welfare measures saw its debt rise to US$64 billion and on track to add $10 billion a year. To stem this, austerity measures were put in – including removal of fuel subsidies, starting mass demonstrations.
In Chile, an increase in metro train fares was the last straw that highlighted the increases in living costs, anger against privatisation and income inequality. The student protests began in Santiago to evade paying these train fares and quickly escalated to vandalising stations and damaging infrastructure.
In Hong Kong, it all started with an extradition bill. For the past 6 months, the city has seen widespread vandalism, a 40 per cent drop in mainland Chinese tourists, significant slowdown in the economy, empty hotels and planes. The bill has been canceled. The local elections in November were very successful for the pro-democracy movement with their winning 17 of the 18 councils. However, China and HK government have dug in their heels and hoping to just wait this out.
In India: Kashmir, Ayodhya, women’s safety and recently, the Citizenship Act saw huge uprisings.
Ever since Trump became the US President, there has been no dearth of sizzling news. Very recently, he became the third President in the US to be impeached (Andrew Jackson and Bill Clinton were the other two).
The House’s articles of impeachment level two accusations against the president – that he solicited a foreign country to help him politically and that he obstructed Congress.
The impeachment will move in early January to the US Senate (where Trump’s Republican Party has a majority) and Supreme Court Chief Justice John Roberts will preside over. The senators ultimately will act as both judge and jury for the next few weeks. It is likely that Trump will not lose his position and continue as US President. It will be left to the 2020 election to decide Trump’s future.
Morality standards and public acceptance of what can be overlooked have significantly changed – and not just in the US. This is an interesting phase where public support for the president from his party and the base has largely remained intact. Economy has been performing well, unemployment is quite low and stock markets have performed really well.