With the New Year only a month away, MM International tracks down the five biggest global events that will be eyed in 2019. Read on to get an insight into the coming year.
Stronger economies and bigger business opportunities! We hope that the coming year will bring in these dynamics so that global markets can flourish with ease. However, there are a few pain points – Trump’s trade policy and the uncertainty of Brexit –which might trigger world trade to hold onto its horses.
The US trade policy
The US trade policy of imposing tariffs on imported steel and aluminium with the so-called objective of ‘balancing trade’ with specific countries has attracted a lot of flak from global leaders. China has even accused the Trump administration of starting a ‘Trade war’ as the US has time and again imposed heavy tariffs on goods imported from the East Asian country. At the recent G20 Summit in Argentina, Donald Trump met Chinese President Xi Jinping and have mutually agreed to halt new trade tariffs for 90 days to discuss the options of easing trade between the two major trade nations.
Will 2019 witness Brexit?
In addition to this, the European Union and the United Kingdom have their own set of challenges. Will the world witness a UK-EU divide? If yes, what will be the trade implications of this divide? “The most difficult part of Brexit will be to figure out the trade regime between the UK and the rest of the EU because the level of trade integration between the members of the EU is the deepest in the world and integrates regulations that govern how products and services are produced and sold within the EU,” states Arancha Gonzalez, Spanish economist and currently the Executive Director of the International Trade Centre.
This holds true as the UK faced a difficult time to finalise the draft of the ‘Brexit’ deal but the final agreement was approved by the EU without any hesitation. However, there are still some hurdles that need to be crossed for Brexit to be officially accepted by the world.
Well known Indian economist Raghuram Rajan states that uncertainty of any sort results in volatility and Brexit will be no exception. Seconding this opinion, a report by the German Mechanical Engineering Industry Association (VDMA) which focuses on the mechanical engineering industry mentions that the great uncertainty in Great Britain would lead to a considerable decline in capital investment.
The VDMA report further adds that in the first half of 2018 (January to July), the United Kingdom was the fifth largest foreign market for the mechanical engineering industry with an export volume of 3.7 billion euros. However, the European Union is of the greatest importance for mechanical engineering: in the first six months of 2018, German mechanical engineering companies sold products worth 41 billion euros to other EU countries, which accounted for almost half of all exports in this period (86.7 billion euros).
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