The year 2019 turned out to be volatile as the trade war between China and the U.S. escalated before leading to a preliminary deal. Next year, all eyes will be focused on the U.S. elections in November and the status of the trade war. But what could be next year’s surprises? We look at three issues brewing underneath the surface regarding European unity, protests in Latin America, and U.S. foreign policy.
- European unity has been under pressure for several years. As the U.K. is leaving the EU, the fragility of the Southern European economies, primarily Italy, will most likely predominate in the coming years. As a result, European unity (and the survival of the EU) will constantly be questioned by nationalist politicians, financial markets and global media.
- Protests all over the continent destabilized Latin America in 2019. Sudden violent protests in Chile forced Sebastián Piñera to commit to higher social spending and draft a new constitution. Protests in Colombia made reform even more difficult for the minority government of Iván Duque. Violent protests followed Ecuador’s unpopular IMF-backed reforms. In Peru, Martín Vizcarra dissolved Congress in his attempt to push through institutional reform. Social unrest in Bolivia forced Evo Morales, who had governed since 2006, to resign.
- For many years (since long before Donald Trump came to power), the U.S. has followed strategies to contain the rise of China (e.g. the “Pivot to Asia”, the TPP) and has used its financial dominance to impose its will on other countries (i.e. sanctions).
Connecting the dots
The year 2019 was marked by the trade war and controversial elections in the EU, India, the U.K., Spain, Argentina, Indonesia, the Philippines, South Africa and Nigeria. Looking ahead, in 2020 there will be no important elections besides in the U.S. Indeed, all eyes will be trained on the U.S. presidential election and its impact on the trade war. Still, we should also look out for events that may surprise us in different parts of the world. We are not talking about low probability events; by definition, those cannot be anticipated. Indeed, we will focus on events that are already brewing under our radar. Here are three examples from our list:
- Building on the momentum of the new European Commission, in 2020 we should expect more proposals for pan-European initiatives. It is also possible that there will be some alleviation of the stringent regulations that prevent the mergers of European companies (e.g. Siemens and Alstom).
- Although we have noted that Latin America will build on its tradition of progressivism, natural resource abundance, and its future on the Western Hemisphere, the most stable region of the world, to become a dynamic economic system, this will not be a theme for 2020. Next year will see even more social unrest in Latin America, which will threaten the implementation of crucial reforms.
- With elections in the U.S., Taiwan and Hong Kong in 2020, China will go on the defensive rather than seek confrontation with the U.S. Itwill focus on becoming self-sufficient in tech industries, protect key relationships across Eurasia and maintain the status quo in Taiwan and Hong Kong.