Coronavirus, trade war and reduced confidence: the challenges of the world economy in 2020

The world economy hurts. A growth of 1.4% for advanced economies and an increase of 4.2% for emerging countries. These are according to Euromonitor, the forecasts for the world economy in 2020, which is marked by three risk factors: the commercial war, the fall in consumption, and the coronavirus.  

The outbreak of the epidemic has become an unexpected actor on the game board of the world economy. Although according to Euromonitor, China is the country with the greatest risk in the face of the situation, the report warns that if the outbreak of the epidemic continues to spread throughout the planet, the risk of a global recession will increase, weighed down by the reduction of consumption and the fall in business investment.  

Euromonitor expected the Chinese economy to rise to 6% in 2020, but after the outbreak of the epidemic, the country’s Gross Domestic Product (GDP) is estimated to advance 5% during the year. The paralysis of production, the closure of stores and the fall in consumption are the main factors that will hinder the Chinese economy. 

China’s GDP will grow up to 6% in 2020 

 
In parallel, although the entry into force of the first phase of the agreement between China and the United States has eased the uncertainty about the escalation of the trade war between the two powers, the international consultant affirms that it will continue to have repercussions throughout the world. For the United States, the consultant estimates that it will advance 1.7% in 2020. 

In countries within the eurozone, the GDP is expected to decelerate between 0.8% and 1.3% in 2020. While consumer spending and the service sector will rise, the fall in business investment, the decline in exports and the slowdown in production are some of the factors that will limit the growth of the region. 

In Japan, for its part, Euromonitor expects a 0.3% economic advance in 2020. The change in the forecast is driven by the announcement by Prime Minister Shinzo Abe of a $ 1 billion tax stimulus package which will be implemented until March 2021. 

The Japanese economy will suffer in 2020 for the coronavirus 

In the first quarter of the year, the Japanese economy will suffer from the outbreak of the coronavirus. However, the consultant believes that this situation is short-term and will cease to have repercussions from the second semester. 

For India, Euromonitor’s growth forecasts go through experiencing 5.8% growth in 2020, which falls below the initial forecasts of 6.4%. The fall in consumption and investment have been the two main factors that have negatively affected the country’s economy. 

The progress of the Russian economy, estimated at between 1.6% and 1.7% in 2020, will depend mainly on the implementation of national infrastructure planned by the Government.   

The evolution of Brazil’s GDP, meanwhile, will be more positive in 2020 thanks to the favorable market condition and the application of monetary policy in the country, according to Euromonitor. The consultant’s growth forecasts for the Latin American country are 2.1% in 2020.