The new year will create opportunities and risks for everyone across the geopolitical and business landscape.
As political, business and civil society leaders assess the global environment, here are five events and trends to watch that could influence actions and responses by governments, industries and markets.
1. Global economic growth will slow in 2019, resulting from softening emerging markets, tighter monetary policies, market volatility, trade disputes and rising debt.
The International Monetary Fund, OECD and private sector economists have lowered their forecasts for global economic growth in 2019, citing rising trade protectionism and instability in emerging markets. Income inequities, slower trade, rising debt and tightening monetary conditions may all contribute to slower growth.
The economic forecast is lower for the United States, China, Japan, the euro zone and several emerging markets. The U.S. Federal Reserve Board will make difficult interest rate decisions in 2019 that could impact not only U.S., but global growth. In June, the United States will mark 120 months of economic expansion, the longest on record.
Key Questions: Faced with slower growth, how will governments, central banks, businesses, consumers and investors respond? Will 2019 hit a soft patch or be a bumpy ride for the global economy?
2. The U.S.-China dispute will endure and escalate in 2019, possibly spilling out beyond trade issues.
Differences between the United States and China are rooted in friction in geopolitics, economics, security and technology. China is seeking a greater role on the global stage with desires to be a technology and AI leader and innovator. Its economic rise, with distinctive national characteristics, poses a challenge to a U.S.-led, rules-based global order.
In the immediate term, the United States and China need to understand each other’s intentions and align on a process to manage differences. Even if trade disputes are addressed in 2019, the underlying competition between China and the U.S. is here to stay. Other countries will seek to find a balance in their relations with both global powers. This is the first round of a battle that will last for decades.
Key Questions: Can the U.S. and China reach a trade agreement in 2019? What will be the implications of U.S.-China relations on global geopolitics, business, technology and security? Can the U.S. disrupt the rise of China’s telecom and technology sector?
3. High-stakes elections around the world will impact governance and policy priorities.
Nearly 2 billion people will vote in national elections throughout 2019. Elections will be held in the following emerging markets: India, Indonesia, Nigeria, Ukraine and Argentina.
In Europe, the United Kingdom and European Union are due to complete their Brexit process on March 29. Germany will see a new leader emerge. European Parliament elections will take place May 23–26. A new EU Commission and president of the European Central Bank will be selected later in the year.
Canada and Australia will also hold national elections. Newly-elected governments begin their terms in Brazil and Mexico.
Key Questions: How will these political events shape global governance, economic growth and international relations? Will populism or protectionism prevail, or will a rules-based international order continue?
4. 5G networking will be introduced and drive innovation in telecom, IoT and AI — from advanced robotics and autonomous vehicles, to consumer electronics and dual use technologies.
5G is a globally competitive race, not just among carriers but also between countries. The new networking standard will bring higher speeds and lower latency to digital experiences and drive innovation in augmented and virtual reality, connected cars and smart homes.
As with previous generations, 5G will be rolled out first in major cities and will take years before there is full national and global coverage. The complexity of 5G means that dozens of companies, carriers, and device manufacturers all need to work together and major investments in infrastructure will be required. The U.S. and other markets may take further action against Chinese telecoms Huawei and ZTE.
Key Questions: Which countries, companies and citizens will be the early winners and losers in the global 5G competition?
5. Divided government in Washington will impact the ability of the Trump administration to advance its agenda.
Democrats will control the U.S. House of Representatives while Republicans control the Senate. Democrats will conduct investigations into President Trump and his administration. The administration and Democrats will debate healthcare, immigration, a national infrastructure program, trade, federal spending and taxes.
If President Trump cannot advance a domestic agenda through a divided Congress, he may focus increased attention on foreign policy, global security and trade, where he has more room to navigate without Congress. However, Congress may assert itself more into foreign policy related to Russia, Saudi Arabia, North Korea and Iran as well as trade negotiations with the European Union, Japan and the World Trade Organization.
Key Questions: Can a Democratic House and President Trump work together? If President Trump pursues a foreign agenda, what are the implications for U.S. relations with allies and adversaries around the world? Who will emerge among Democrats in 2019 to challenge President Trump in 2020?
By Jim Meszaros, Executive Vice President at Powell Tate, Washington D.C.