2019 was a dramatic year, full of manufacturing slumps, yield-curve inversions, and other possible harbingers of impending recession. And yet the curtain closed on 2019 with the global economy seeming, somewhat improbably, pretty much okay. Will 2020 be equally dramatic? Will it, too, have an upbeat ending?
Three out of four economists, according to one survey, predict a recession in the US by the end of 2021 and, although predicting recessions is nearly impossible, it’s not hard to spot the imbalances that have built up that are due for an adjustment. If there’s an underlying theme it’s that, a decade since the financial crisis, the structure of the global economy has changed in ways we still don’t understand. Ultra-loose monetary policy has boosted asset prices and put people back to work, but productivity growth and business investment have not kept pace. Globalization has woven together supply chains and financial markets but not trade politics.
In this field guide we’re tackling the biggest risks to the global economy in 2020. We can’t tell you whether there’ll be a recession this year–although we asked some forecasters to try. What we can tell you is that if there is a recession this year, there’s a good chance it will involve one of these major vulnerabilities in the world economy.