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Five key economic growth risks to keep your eye on heading into 2020 – Globe and Mail Op-Ed
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Page Title: | Five key economic growth risks to keep your eye on heading into 2020 - Globe and Mail Op-Ed – C.D. Howe Institute |
Article Title: | Five key economic growth risks to keep your eye on heading into 2020 – Globe and Mail Op-Ed |
URL: | https://cdhowe.org/publication/five-key-economic-growth-risks-keep-your-eye-heading-2020-globe-and-mail-op-ed/ |
Published Date: | December 17, 2019 |
Accessed Date: | February 16, 2025 |
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Global growth is being deeply affected by the trade turmoil fomented by U.S. President Donald Trump and uncertainty is at the forefront, with slower growth in many places and plenty of policy risk. Here are five key issues to watch in 2020.
Expect little overall improvement in global economic prospects. It would be unrealistic to expect a material improvement in economic performance. Both the International Monetary Fund and Organization for Economic Co-operation and Development project the global economy will not strengthen by much; growth in 2020 will remain below 3.5 per cent, after 3 per cent projected for 2019. That would be the weakest period of global growth since the 2008-09 financial crisis and recession.
Policy risk remains heightened. There are always risks to the economic outlook, but this is an especially turbulent time. Recession risk remains present. Yield curves that were inverted during the summer have returned to a modest uptick, but they remain an important leading indicator of possible recession that ought to be taken seriously.
Trade tension, notably the U.S.-China trade dispute, is taking a toll on business confidence and investment in many countries and regions. While ratification of the new North American free-trade pact, the United States-Mexico-Canada Agreement, and a British election result backing the Conservatives’ plans on Brexit might help, continuing policy uncertainty adds to the risk of trade tension spilling into financial markets. The probability of being disappointed by the actual performance of the global economy is likely greater than the chance of a stronger outcome, which makes the consensus outlook for 2020 imbalanced. And climate change risk has not (yet) been factored into the growth outlook.
Glen Hodgson is a senior fellow at the C.D. Howe Institute.
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