Forecasting the world in 2020

Brexit was not stopped, populists made smaller gains than expected in May’s European parliament elections, and the S&P 500 beat our — and most other people’s — expectations. Along with Brazilian growth falling below the year before, the FT’s forecasting team got those predictions wrong for 2019, though Philip Stephens last year admitted he offered his forecast that Brexit would be reversed “as much in hope as expectation”.

Though the world may seem ever more unpredictable, four wrong answers was an improvement on our dismal eight the year before. And aside from Brexit, readers in our annual competition generally made the same mistakes we did — more than 70 per cent of you got the same three questions wrong. For a third straight year, though, the top-scoring readers beat the FT. Three tied on 19 correct answers out of 20.

Will Boris Johnson agree a trade deal with the EU?

Yes. That is his aim and he has a good chance. By announcing the deadline will be set in law, however, the prime minister has set his sights low. It will be near-impossible to negotiate much beyond a bare bones deal covering trade in goods during the time available. Mr Johnson has emphasised his aim is to remove tariffs and quotas on all goods trade. The EU27 also have an interest in such a deal; collectively they have a large surplus in trade in goods. But there will be pitfalls. Watch out for French insistence that fisheries be included in any deal and that Britain give assurances that it will not seek to undercut EU standards on labour and the environment. Philip Stephens

Will Britain’s Labour party return to electability?

No. Labour’s outgoing leaders have recommended a “period of reflection” on the way forward for the UK’s main opposition party after its worst election defeat since 1935. Those still in the party who feared or warned that having Jeremy Corbyn in charge would end this way — and those moderates rushing to rejoin in order to have a vote in choosing the new leader and deputy — may be disappointed, however. Recrimination and factional battles will take a long time to play out. So far, the leadership hopefuls are being careful not to repudiate the sharply leftward journey under Mr Corbyn — to win, they may have to promise much of the same. Miranda Green Recommended Culture Call podcast58 min listen Our 2019 cultural roundup: the biggest and best of the year

Will Angela Merkel’s grand coalition collapse?

Yes. Germany’s chancellor will struggle to keep her “GroKo” intact because junior partners the Social Democrats are lurching leftwards. New SPD leaders Norbert Walter-Borjans and Saskia Esken were forced by senior party figures and ministers to soften their anti-coalition rhetoric at the recent party conference. But they were elected on a plan to leave, and their vow to boost spending will clash with Ms Merkel’s fiscally conservative CDU. The SPD might seek to avoid snap elections, fearing a drubbing, and allow a minority government until 2021 when Ms Merkel retires. Anne-Sylvaine Chassany

Will Matteo Salvini come back to power in Italy?

Yes. After bungling an attempt to trigger early elections in August and finding himself locked out of office, the leader of the rightwing nationalist League is riding high in the polls once again. The coalition that took power four months ago is proving to be as querulous and ineffective as the one Mr Salvini terminated. Defeat for the left in its stronghold of Emilia-Romagna in regional elections in late January will send the government into a tailspin. Even a new anti-Salvini protest movement known as the Sardines reaffirms his pre-eminence. Ben Hall

Will Donald Trump win the popular vote in November’s election?

No. In 2016, Hillary Clinton took almost 3m more votes than Mr Trump yet still lost the electoral college. That margin will be even wider in 2020 yet could still result in Mr Trump’s re-election. Many of the most energised anti-Trump voters live in already-Democratic states like California and New York. Their votes could thus be “wasted”. The real battle will again come down to the smaller mid-western states that delivered victory to Mr Trump last time. Ed Luce

Will the US go into recession?

No — though the question haunts the markets, the White House and US corporate leaders; half of chief financial officers told a recent Duke University survey they expect a recession over the next year. It is easy to see why. No other advanced economy bar Australia has defied the business cycle for so long, and there are signs nervous US companies have been cutting capital spending. However, consumers have remained surprisingly buoyant in 2019. There is good reason for this to continue in 2020 with unemployment still at rock-bottom and jobs being created for the poorest parts of the economy. That, on balance, should keep the economy growing. Gillian Tett

Will India regain its status as the fastest growing large economy?

No. India’s GDP growth has collapsed from 8 per cent to 4.5 per cent in the last year and a half due to severe problems in the banking and financial system and the once-booming real estate sector. But Prime Minister Narendra Modi’s government insists India’s economic woes are cyclical and has no credible plan to tackle the challenges. Growth may recover slightly from its current six-year low but India will struggle to regain enough momentum to outpace even a slowing China. Amy Kazmin

Will there be a war with Iran?

No. Concerns about a conflict between the US, its Arab allies and Iran have simmered for months as the Trump administration has ramped up his “maximum pressure” strategy against the Islamic republic. Tehran has responded with provocative moves — downing a US drone, seizing a British vessel and allegedly attacking Saudi Arabia’s oil industry. Yet despite the belligerent rhetoric, Mr Trump has displayed reluctance to take muscular action. All protagonists insist they do not want war. And with an election looming, Mr Trump is even less likely to want America embroiled in a conflict. Any miscalculation, however, risks inadvertently triggering a broader conflagration. Andrew England

Will South African debt hit junk status?

Yes. The country’s sovereign debt rating has been hanging by a thread with only Moody’s among the top three agencies rating it above junk. In November, Moody’s put it on negative watch saying the government lacked the political capital to implement reforms. The economy has stalled and South African Airways placed into bankruptcy protection. Eskom, the biggest state-owned enterprise, has imposed growth-sapping blackouts and cannot repay $30bn in debt. Tito Mboweni, finance minister, will have to pull out all the stops to persuade Moody’s things are salvageable. The odds must be against him. David Pilling

Will the protests that have shaken Latin America continue?

Yes. Underlying causes of the anger — weak growth, serious inequality and perceptions that governments are ignoring many people’s needs — will not go away. 2019’s upheavals did not respect political colours, hitting market-friendly governments in Chile, Colombia and Ecuador but also felling a leftist president in Bolivia. In 2020, Argentina’s new Peronist president may enjoy a brief honeymoon, but there are serious unresolved crises in most of the Andean nations and Mexico could be vulnerable if its populist leader Andrés Manuel López Obrador proves unable to control rising violence and restart the stalled economy. Michael Stott

Will France’s Emmanuel Macron engineer a ‘reset’ with Vladimir Putin’s Russia?

No. The French president has made ambitious overtures to bring Russia back into the fold. But the path to any broader reset runs through a peace deal in Ukraine — which is unlikely. Ukraine’s president Volodymyr Zelensky was elected in part on a pledge to end the simmering conflict in the country’s east. He cannot agree, however, to Moscow’s demands to grant “special status” to the Donbass — which Kyiv fears would enable Russia to maintain leverage through its proxies there, making the region a kind of cancer inside Ukraine. More limited resumption of dialogue with Russia is possible, though. Neil Buckley

Will we see meaningful regulation of big tech?

No — at least not in the huge US market. The path towards the most likely regulation — a privacy bill — is fraught. Democrats want tough rules, and Republicans favour weaker regulation (which won’t get through the House). Meanwhile, the US has pushed big tech legal loopholes, such as a provision that tech companies are not treated as publishers, into the USMCA trade deal with Mexico and Canada, and is trying to make it part of any new transatlantic deals. The EU’s digital supremo Margrethe Vestager wants to connect and strengthen privacy and antitrust regulation. But a precedent-setting case will take years to complete. Rana Foroohar

Will Disney+ change the game in streaming?

Yes. The digital video services Apple, Disney and HBO unveiled in 2019 ensure that streaming will remain the dominant force reshaping media in 2020. First among them is Disney+, chief executive Bob Iger’s gamble that viewers will pay up for franchises like Star Wars, Marvel and Pixar. Analysts expected it to find up to 12m users by late 2020 but its blockbuster launch wrongfooted them. Disney+ should instead blow through 20m, rattling larger incumbents and proving content truly is king when the Magic Kingdom also controls its distribution. Andrew Edgecliffe-Johnson

Will Uber become profitable in 2020?

No — but expect to hear a lot about “adjusted” profits in various parts of the company. Uber knows investors want proof the ride-hailing business can break even after breathtaking losses in 2019. It has promised to be profitable — but only on an adjusted basis — by 2021. Private backers were happy to fund expansion at subsidised rates. Public markets are not. After listing in May, Uber shares have lost a third of their value. Costs are being trimmed; sales are rising. But without exiting food delivery or launching driverless cars it is unclear whether Uber will ever make a profit. Elaine Moore

Will China become world leader in 5G telecoms?

Yes. China’s lead in 5G telecoms — superfast wireless connectivity that will be the nervous system of the Internet of Things — will be obvious in almost all arenas by the year-end. Measured by 5G base stations installed, China will surge far ahead of other countries. On the number of contracts to provide 5G services overseas, Huawei will pull ahead of competition from Ericsson, despite the US push to curb the Chinese telecoms group because of national security fears. And in 5G smartphone sales, Huawei, Oppo, Xiaomi, Vivo and other Chinese makers will far outstrip Apple, Samsung and others. James Kynge

Will vaping be banned?

No. Vaping of nicotine in e-cigarettes is safer than smoking tobacco, though it carries some risks. The deaths of 48 people in the US — some of whom inhaled THC oils for a cannabis high — and vaping by school students of brands such as Juul have put pressure on the Food and Drug Administration to get tough. But science indicates that switching from cigarettes to e-cigarettes as a means of quitting saves lives. While countries such as India have rushed into making vaping illegal, do not expect a blanket US ban. Instead, it will move closer to European countries by tightening marketing and limiting e-cigarette flavours. John Gapper

Will global carbon emissions fall?

No. Emissions from burning fossil fuels have been growing 0.9 per cent a year on average since 2010 and there are many signs of another rise in 2020. If global GDP grows as forecast we are likely to see rising use of energy, which still mostly comes from fossil fuels. Some of the fastest growing economies will again be big users of coal, the dirtiest fossil fuel, not least China. It emits more CO2 than the US and EU combined, and Beijing’s efforts to stimulate the economy and boost energy security could easily bolster coal use. Pilita Clark

Will Brent crude prices end the year above $65 a barrel?

No. Saudi Arabia led Opec, and allies including Russia, in a recent round of production cuts at the end of 2019, propping up oil prices above $65 a barrel. But for crude to remain here throughout 2020 will require producers to stick to their share of curbs, with the kingdom taking the heaviest burden for a prolonged period. Russia’s ongoing compliance with the deal is under scrutiny. While growth in US shale supply growth is forecast to weaken in 2020, production from other non-Opec countries will expand. And Donald Trump in an election year will be keen to enlist the support of his Saudi partners in ensuring prices do not escalate. Anjli Raval

Will the three-decade bond rally finally come to an end?

No — though it is right to ask the question. In summer 2019, the asset class experienced a storm of buying that fired up bond prices to the point where $17tn of debt around the world delivered buyers a guaranteed loss. The storm has abated, but still $12tn of bonds are effectively in the deep freeze. Now, investors’ instinct to buy debt on any dip remains extremely robust. We may not see a repeat of the wild summer of 2019 any time soon, but a market rush to the exit seems unlikely as long as central banks stand ready to offer support. Katie Martin

Will Europe’s banks keep slashing jobs?

Yes. Little suggests 2019’s tough operating environment will change soon. Lenders are being squeezed by low or negative interest rates, weak investment banking revenues and slowing economic growth. Banks are also braced for the Basel IV rules, which from 2022 will increase banks’ capital requirements. By December, banks across Germany, France, Spain, Switzerland and the UK had collectively announced more than 60,000 job cuts. HSBC will keep up its cost-cutting drive under interim chief executive Noel Quinn. In Italy, other banks could follow UniCredit, which is cutting 8,000. More jobs could go in the UK, especially if Brexit hits the economy hard. Sylvia Pfeifer


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