East Asia Leads World Amid Mixed Economic Growth
by John J. Metzler
Weirs Times Contributing Writer
UNITED NATIONS – East Asian countries continue to be global leaders in economic growth despite ongoing trade tensions between the USA and China. Nonetheless, even among those dynamic Asian states, growth has tempered from 5.7 percent in 2018 to 5.2 percent in 2019 amid an international downshift. The region has seen China’s once dizzying expansion temper considerably from 9.4 percent a decade ago to 6.1 percent this past year.
According to the UN’s World Economic Situation and Prospects 2020 report,“Global growth slowed to a 10 year low of 2.3 percent in 2019, with a modest uptick projected at 2.5 percent in 2020 and 2.7 percent in 2021.” Internationally, the report adds that, “one in five countries will see per capita incomes stagnate or decline in 2020.” That troubling trend is especially true in Latin America and the Caribbean.
Strong economic growth in the United States, coupled with the long awaited Congressional approval of the new North American trade deal with Canada and Mexico, (USMCA), should serve as a stimulus to markets and overall trade worldwide. The landmark accord solidifies one of the world’s largest trading blocks and, contrary to its NAFTA predecessor, does so with far greater concessions to labor unions and protection for American workers. Mexico, suffered a 10-year low in growth while its economy stagnated last year.
As importantly, Washington’s new trade deal with Beijing assures the calming of trade tensions with China. The Phase One China Trade accord came amidst the Trump Administration’s pressures on Beijing to buy $200 billion more American goods and services, including $40 billion in additional agricultural commodities. Trump’s controversial tariffs have clearly begun to level the playing field between the USA and China.
The USA’s GDP growth for 2019 recorded an impressive 2.3 percent with a historically low unemployment rate of 3.5 percent. Both new trade deals should sustain vibrant economic growth.
Regarding Latin America, the Survey adds that the region is “expected to experience a slow and uneven recovery over the next two years, amid strong domestic and external headwinds. After growing by only 0.1 percent in 2019, aggregate GDP is projected to expand by 1.3 percent in 2020.” A fall in commodity prices throughout Latin America has led to uneven growth. GDP is approximately 4 percent below the 2014 levels.
The Survey warns, “Amid lower average incomes and persistently high inequality, poverty levels have risen.” This remains true in countries such as Brazil and Argentina. Brazil should see improvement with growth projected from 1 percent in 2019 to 1.7 percent in 2020.
“Argentina’s short-term outlook is subject to major uncertainties,” the document warns.
Overall the Survey cautions, “In South America, a return to robust growth remains elusive.”
“Policymakers should move beyond a narrow focus on merely promoting GDP growth, and instead aim to enhance well-being in all parts of society,” commented Elliott Harris, UN Assistant Secretary General for Economic Development.
The World Economic Situation and Prospects offers a trove of data worth digesting.
India, a regional superstar has slipped; growth of 7.2 percent in 2017 has fallen to 5.7 percent last year.
The Islamic Republic of Iran remains in free fall due to economic sanctions, civil unrest and Regional political tensions. Growth fell from minus 2 percent in 2018 to minus 7 last year.
Then there’s also what I call economic backsliding; in other words when better off countries lose ground due to corruption, social conflict, and divisive political issues. Venezuela a once prosperous petroleum-rich country is a victim of corruption and state socialism. Sadly that’s been the case for more than a decade. Last year, Venezuela’s economy faced a negative 25 percent growth rate!
The misperception remains that successful countries can only move forward and prosper. Wrong! Chile has faced unexpected political discord which impacts the economy as does strife torn Lebanon. Hong Kong, the poster child of entrepreneurialism, has nonetheless spent the past six months in a bitter political feud with Beijing over political rights and freedoms; the once prosperous economy has gone into limbo. Hong Kong’s economy contracted by 0.6 percent. Chile, despite its social discord, has been able to end the year with just under one percent growth. All these countries were regarded as successful last year.
Nothing seems certain in this world.
John J. Metzler is a United Nations correspondent covering diplomatic and defense issues. He is the author of Divided Dynamism The Diplomacy of Separated Nations: Germany, Korea, China.
