PwC predicts that 2020 will be a year of ‘slowbalisation’ in the global economy, where trade tensions continue to create challenges for global supply chains and further integration of the global economy.
Having said that, PwC pointed out that services would remain a bright spot for global trade, with the total global value of service export forecast to hit a record US$7 trillion in 2020.
The US and UK are likely to remain the leading exporters of services, although China is expected to overtake France in fourth place during the year., the firm noted.
Uncertain outlook for global trade
The overall picture for 2020 is that global economic growth will continue at a modest pace, as the major economies will be buoyed by accommodative financial conditions and an increased reliance on household consumption as a source of growth instead of net exports and investment, said Barret Kupelian, senior economist at PwC UK.
“The global volume of merchandise traded slowed down dramatically and even went into reverse in 2019, said Kupelian. “Coupled with the effective disbandment of the WTO’s dispute settlement mechanism in December, we can expect more challenging times ahead for global trade. This is a period of “slowbalisation”—with integration and trade flows still growing but at a slower rate.”
Given the links between merchandise trade flows and economic growth, PwC expects to see a similar effect of below-average growth in the global economy in 2020, he added.
According to the company, global economic growth in 2020 is expected to grow at a rate of around 3.4% in purchasing power parity terms, versus its long-term average of a 21st century average of 3.8% per year, said PwC recently.
More jobs across the board but not necessarily spread equitably
In addition, PwC expects the G7 to continue to create jobs, to the tune of around 2 million.
Four out of the five new jobs in the G7 will be created in the US, UK and Japan, the firm said.