10 Geopolitical influences to watch in 2020
The U.S. elections, slowing economic growth and climate change feed uncertainty
The world in 2020 will experience a set of uncertainties and risks to stability, prosperity and security. Here are 10 events that will define and shape the geopolitical landscape this year — presenting opportunities and challenges to governments, multinational corporations, civil society and citizens of the world.
UNITED STATES 2020 ELECTIONS
In America, national elections will dominate domestic attention. Other nations will be forced to take into account the opportunities and risks of engaging with the United States until the outcome is determined in November. The U.S. will implement trade agreements with China, Mexico, Canada and Japan — but implementation disputes could still disrupt business. While the U.S. economy is forecast to remain healthy in 2020, a slowdown in growth, or a foreign policy or security crisis, could impact the election outcome. Further, America’s place in the world will be part of the national election debate.
CHINA & U.S. TRADE AGREEMENT
China and the United States have finalized their Phase 1 trade agreement, reducing the immediate risk of business disruptions. The US focus will be on compliance. China’s economy is slowing, and it is uncertain how the government will respond — whether with structural reforms, or fiscal and monetary policies. China will continue to hold an aggressive foreign policy, at least in part as a response to the ongoing protest movement in Hong Kong and the outcome of Taiwan’s presidential election.
EUROPEAN UNION GLOBAL RELATIONS
The new EU Commission will pursue an assertive agenda to advocate European interests and sovereignty in global trade, technology, competition, defense, digital taxes and climate. This could trigger new disputes between Brussels and Washington. Economic growth on the continent will remain weak in 2020, increasing pressure on the European Central Bank to stimulate growth.
MIDDLE EAST & NORTH AFRICA SANCTIONS AND SECURITY
Iran may become more aggressive in response to US-imposed sanctions, and will ramp up its nuclear program in 2020. Other countries — Israel, Turkey and Saudi Arabia — will need to react to any further escalation that impacts regional security. Economic growth will slow in Saudi Arabia, and with it, proposed economic reforms. Turkey will develop trade and defense links with Russia to reduce its dependency on the US and Europe.
GLOBAL CLIMATE CHANGE
Severe fire seasons in Australia, California and Brazil have highlighted the increasing impact of climate change on global business risk. There is increasing pressure on governments, companies and citizens to act. Citizen advocacy and legal challenges are on the rise. National governments are falling behind on their Paris commitments. Climate risk is increasingly being priced into credit and capital market decisions, forcing companies to give greater consideration to climate risks on business decisions ranging from supply chains, growth, profits and reputation.
GLOBAL TECHNOLOGY & DATA COMPETITION
Increasing global competition over technology policies, supply chains, regulatory environments, 5G rollouts, AI applications, data privacy, digital taxes, antitrust and other issues may divide the United States, Europe, China and other global markets — as each looks to protect domestic companies and national interests. This will make it more difficult for tech companies to operate globally.
SOCIAL UNREST IN LATIN AMERICA
Slow economic growth will continue to trigger social protests in several countries. Argentina’s new government will pursue state interventions and protectionism, and may default on its debt in 2020. Brazil will move ahead with economic reform. These divergent economic paths could threaten the future of the MERCOSUR agreement. Political and economic chaos in Venezuela will continue, deepening a regional migration crisis.
GROWTH IN INDIA
Boosting growth will be India’s primary challenge in 2020. The Bharatiya Janata (BJP) -led government is also pushing Hindu nationalism, which could heighten social and ethnic tensions. The Modi government will look to expand economic and defense ties with its neighbors to counter China as a regional hegemon.
BREXIT
The UK parliament will approve a Brexit deal, but the UK will remain in the EU single market through the end of 2020. The UK and EU will begin to negotiate a trade agreement. The UK will try to include financial services in the agreement.
GLOBAL ECONOMY STAGNATION
Global growth is forecast at 3.3% in 2020, after reaching 3% in 2019. If that prediction is true, it would spell the weakest period of global growth since the 2008–09 financial crisis. Growth will be led by emerging markets (which now account for 60% of global GDP), while advanced economies will expand by only 1.7%. Slow growth and income inequities will continue to trigger social unrest and pressure on governments to simulate economies.
Edited by Kate Baddeley
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