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Cushman on 2020: economics and politics will become increasingly intertwined

Cushman’s Big 3 political and macro predictions for 2020 are:

  • Global economic slowdown is likely to continue in 2020, although the chances of a recession remain low;
  • The ongoing war for talent will be an economic hurdle to overcome in 2020 and beyond; and
  • Economics and politics will become increasingly intertwined

The global economic slowdown has been well documented in 2019, and the UN’s trade and development body, UNCTAD is one of many voices warning of a recession in 2020, says Cushman, adding that any potential recession in 2020 or beyond would likely not be to the extremes seen during the GFC.

Oxford Economics predicts global real GDP growth will ease in early-2020 but is unlikely to see any sizeable change. Indeed, consensus forecasts indicate the likely of a recession in 2020 remain low.

Andrew Phipps, Head of EMEA Research at Cushman & Wakefield, explains:

“At the start of the previous decade, global trade was growing at almost 8% per year, almost double the rate of growth in real GDP. In 2019, however, the World Trade Organization (WTO) expects trade to grow by just 2.6%, in line with GDP. Whilst the recent eruption in protectionism has undoubtedly accelerated the slowdown, other industry-related cyclical effects are also at play.

“The U.S. National Association of Business Economists believe the #1 risk to the U.S. expansion is the trade war. The IMF estimates that one-third of the deceleration in global trade activity is attributable to the auto sector—which has been largely immune in the U.S.-Sino trade dispute thus far. And up until as recently as 2015, growth in services trade had been outperforming goods trade considerably, and had to an extent been masking the overall trade slowdown.

“Clearly, a slowing growth backdrop is not the only potential threat on the horizon. The ongoing war for talent will continue to be an economic challenge for companies from all sectors, with Gartner putting talent shortage as the top emerging risk faced by businesses worldwide. In the US more cities have an unemployment rate below 4% since before 1990 (when the data began to be captured).

“Looking beyond the economy, the global political landscape has shifted in the last decade, with signs of more to come in 2020. Years of wealth inequality and stagnating wages have contributed to a rise in populism, catalysed by the increase in information transfer permitted by social media platforms. The growing chasm between the ‘haves’ and the ‘have-nots’ exacerbates the issue, with political power swinging increasingly to the extremes.

“This political polarisation has come with several consequences, most notably an increase in civil unrest and protesting taking place across the world in Hong Kong, France, Spain, Lebanon, UK, U.S. and throughout Latin America. In 2020 there will be several significant elections including the U.S. presidential election, the United Nations Security Council election, the Polish presidential election – not to mention the potential fallout from the UK general election scheduled for 12th December 2019.”

james.wallace@realassetmeda.com