The 2019 Agenda
Some unfinished business from last year
Every year, around this time, I get the urge to write a column on the global economy or the outlook for the new year. This year, I am feeling a little gun-shy. Since I penned the column "Uncertainty and volatility in the coming years: A 'quick and dirty' forecast" for The Daily Star over two months ago (October 27, 2018), much has happened in the global arena that I did not quite foresee then. I did not accurately anticipate the gyrations in the global stock markets, the political uncertainties in the USA, and the intensity of economic or political turmoil in China, Japan, EU and the UK, and some countries of Latin America.
While I am quite sanguine about the economic prospects for 2019 and feel confident that this year will be a good one for the pocketbook of the average person, I have some trepidation regarding the outcome of two vital deadline events ahead of us, viz., the UK's departure from EU (popularly known as Brexit) on March 29, 2019 and the three-month "partial" cease-fire in the US-China trade war ending on March 2, 2019. There are still too many "plays"—to use a term from football—left in each of these games to accurately predict how things will go in the next few months.
The news headlines in the coming weeks will be dominated by a few stories that are carryovers from 2018. Prominent among them are Brexit, the US-China trade war, and the border wall between the USA and Mexico. The border wall, an enigma as well as a sleeper since Donald Trump placed it on his 2016 Presidential Manifesto in 2016, shot into prominence late in December 2018 after Trump and the Democrats wrestled over budgetary allocations for the wall forcing a partial government shutdown in the US. Some other long-term problem areas include the refugees from conflict zones in the Middle East, the ongoing strife in Israel's border area with Gaza, the Rohingya crisis, the Korean denuclearisation challenge, and the continuous seesaw motion in sections of the world economy including the stock, commodity, and financial markets.
Most of the topics mentioned above are not new for today's globally attuned citizens, except for the fine prints of Brexit and the trade war. It can be expected that many of these will be overshadowed by other emergencies that might emerge; unfortunately, a myriad of other crises that affect some of the world's most vulnerable populations, including the refugees in Asia, the rising sea levels, and the conflicts in Yemen, Congo, and Palestine, can be expected to continue beyond 2019. And for a good reason. Most of these are sore points in the global landscape that flare up from time to time only to be treated with palliatives. And like diseases that are left untreated, international problems that are left to fester for long often take a longer time to heal.
The Brexit drama is beating all odds and it is not clear what the endgame will be. Prime Minister Theresa May has launched a telephone diplomatic initiative to seek additional concessions on the Withdrawal Agreement reached earlier between the UK and EU. The sticking point is the Irish border issue. May has requested some form of legally binding rewording of the agreement to ensure that a stopgap measure, known as "backstop", is temporary. One of the PM's coalition partners, Irish DUP, is worried that EU will use the backstop arrangement to lock the UK into a permanent one. On the other hand, the EU bloc has warned that "the 585-page treaty cannot be renegotiated" and it is reluctant to issue "legally binding guidance on how it should be interpreted." It is expected that debate in the British parliament will resume on the week of January 7 and a vote is scheduled for the week of January 14. There are fears that DUP will join hands with MPs from the Conservative Party known as "Eurosceptics" to bring her government down.
In the USA, the budget problem is likely to be resolved soon since government shutdowns, even partial ones which we are witnessing now, do not go on forever. On January 3, a new Congress was sworn in, and the House of Representatives is firmly in the hands of Democrats. Whether the new power-sharing arrangement in Washington will lead to greater stability needs to be seen but there is already talk of reining in Donald Trump's unchecked joyride seen in the past two years.
A word of caution or warning comes from Samuel Brannen of the Center for Strategic and International Studies (CSIS), a think-tank in Washington, DC, who suggested that 2019 will be a year of uncertainty: "Multiple-personality-disorder Brexit, Italy's debt crisis, civil unrest and a cratering presidency in France, a lame duck German chancellor, and more leadership vacuums."
I will add a new item to Brannen's list of uncertainties: the international oil price, which has taken a nosedive recently, and there is no way to tell what will happen next due to a twist created by US sanctions on Iranian oil. After the US withdrew from the nuclear agreement with Iran, it targeted oil exports from Iran but granted 120-day waivers to China, India, Italy, Greece, Japan, South Korea, and Turkey. The waivers might be withdrawn by the end of May and this will affect the oil market depending on how OPEC responds to the drop in Iran's exports.
Fortunately, at this juncture, all indications point to a burgeoning year for the world's economy. Admittedly, some elements of the global media such as The New York Times appear to think otherwise. In a dig at Donald Trump, NYT asks in a headline, "Economy Is Strong. Leadership Is Shaky. Which Will Win Out in 2019?" There are contrary views in abundance, too. On Christmas Eve, Reuters reported, "The world economy is set to enjoy a very good year. In that, it will be much like 2018 and 2017 and most probably like 2020 and 2021."
Economies of China, Japan, Germany, and the eurozone slowed down towards the end of 2018, mostly influenced by the ripple effects of the trade war. It is almost a given that if the UK crashes out of EU without an agreement (no-deal Brexit), it will have a negative impact not only on the British economy but also on the EU markets.
I will end this week's column with a personal note and extend my thanks and best wishes for a happy new year to the readers of The Daily Star. I hope that 2019 is a peaceful, prosperous and stimulating year for you. Bangladesh is stepping into the fourth year of our SDG agenda. We can look forward to the excitement as preparations are afoot to celebrate the 50th birthday of our nation in 2021. Concurrently, we are also going to work hard to give the second decade of this millennium a very robust send-off. Hopefully, we can collectively say that the decade 2010-2019 was a ball! And, on a personal level, I cross a milestone completing my first decade as a columnist for The Daily Star. Next year is going to be a good one for me. I know it. I hope it is true for each of you, and you see it that way as well.
Dr Abdullah Shibli is an economist and Senior Research Fellow at the International Sustainable Development Institute (ISDI), a think-tank based in Boston, USA. His new memoir, "Fairy Tales: Stories from My Life", will be published by Jonantik soon.