As 2019 comes to a close, the world’s financial markets are hitting record highs, celebrating that Britain will finally see closure on Brexit through a thumping election victory for Boris Johnson and a US-China trade truce that seems to push more intractable problems to the future. The S&P 500 index is up more than 27 per cent in 2019, the strongest annual gain since 2013.
A truce is not a treaty and Johnson’s victory is only the start of a long Brexit journey. But 2019 has indeed been an eventful and stressful year: it is set to be the second- hottest on record and has been marked by protests from Chile to Hong Kong. This was a year of intense politicking, but there are trends emerging.
The Conservative Party’s victory in Britain over Labour was a clear sign that leadership matters. Labour leader Jeremy Corbyn was a weak 1970s-style socialist who had few new ideas to offer as an alternative to the clear choice of Brexit. Johnson, meanwhile, saw that people simply want an end to three years of confusion.
Similarly, even though US Democrats have impeached US President Donald Trump, there is no chance that the trial will pass through the Republican-controlled Senate. And, with 15 Democratic presidential candidates still in the field, the chances that Trump will be re-elected in 2020 look better than ever.
From his supporters’ point of view, Trump has delivered on his electoral promises: the US economy is still growing. While the left dithers, the right acts, often with power in mind.
In Europe, much will depend on how the emerging leadership in the European Union tackles its many challenges. French President Emmanuel Macron offered a strong hint when he said Nato was experiencing “brain death”. With Britain leaving the EU, the key axis of European leadership is France and Germany.
Will Germany loosen its fiscal purse strings by reflating to boost European growth and revive the southern European economies such as Italy and Spain? Spain is struggling with Catalans’ call for independence, while the stagnant Italian economy has led to toxic populist politics.
But the deeper existential threat facing Europe is immigration. As long as climate change stresses the North African and Middle East economies through droughts, worsened by civil strife and failing governments, people will move to cooler climates and richer economies.
The ageing economies in Europe need new labour to stimulate growth, but can they peacefully assimilate cultural, ethnic, language and religious differences? Many Scandinavian countries are liberal in their approach and welcoming to immigration in their policies, but even they recognise that their schools and urban services are stretched to breaking point trying to deal with huge gaps in language and training skills for new arrivals.
Refugees and migrants wait to be transferred from the port of Mytilene to other parts of Greece on September 2. Photo: EPA-EFE
In Asia, no country has escaped the US-China trade war, with growth in trade slowing and investments in limbo as the outlook becomes blurry. China’s economic growth is slowing. What the Asia supply chain fears most is the decoupling of standards and markets, which would mean they have to retool, losing economies of scale and market share.
Political tensions have flared in South Asia between India and Pakistan on Kashmir, and within India on the government’s new citizenship law. Protests have erupted, rooted in issues of identity and national security.
In Latin America and Africa, the growing population face fewer jobs and climate change, resulting in populist anger. Inflation in Argentina has already reached 50 per cent per annum, Mexican growth is in negative territory and both Nigeria and South Africa are struggling with rising youth unemployment and unrest.
Indian protesters shout slogans against the government's Citizenship Amendment Bill, during a strike called by a students’ organisation in Agartala, in India’s northeast state of Tripura, on December 10. Photo: AFP
Toxic politics are only a reflection of the boiling problem of climate warming on top of disruptive technology and inequality. Politics was what stopped the Madrid UN Conference of Parties (COP25) from taking firm collective action.
Before the meeting, UN Secretary General António Guterres asked: “Do we really want to be remembered as the generation that buried its head in the sand?” At the end of the meeting, he admitted he was “disappointed”. The international mindset is still like that of a frog in boiling water.
The bad news is that UN notes “the world is already 1.1°C warmer than it was at the onset of the industrial revolution, which is already having a significant impact on the world and on people’s lives. And if current trends persist, then global temperatures can be expected to rise by 3.2 to 3.9°C this century, which would bring wide-ranging and destructive climate impacts.”
But these averages hide the fact that extreme variations in weather would already make many parts of the world uninhabitable for people and livestock or for growing food.
The good news is that more companies are waking up to climate change, seeing opportunity instead of threats to profits. Asset managers with more than US$34 trillion in assets under management are pushing governments to price carbon, reduce fossil-fuel subsidies and phase out coal-based power plants.
The climate protests led by Swedish teenager Greta Thunberg and Hollywood actress Jane Fonda signal that there is a generational coalition forming to push for action on all fronts.
Ironically, with central banks having discovered quantitative easing, there is no shortage of finance to take action on climate change. However, no one has the courage to direct resources towards green infrastructure. At zero and negative interest rates, money is being shoved to rich borrowers, not to where our existence is at stake.
Will 2020 be a year of clear vision, or 366 days of muddling through? We are still wearing cold-war glasses from the 1960s, while trying to tackle problems of the 21st century. Get your eyes checked in 2020.
Andrew Sheng writes on global issues from an Asian perspective
