The specter of a financial crisis ... weak prospects for an improvement in the global economy in 2020

Abdul Hafiz Al-Sawy

The year 2019 witnessed global economic conflicts, the most prominent of which were the trade barriers that America led towards a group of countries, especially China, and this led to a decline in the rate of growth in the global economy to about 3% in 2019, down from 3.7% in 2018, and 3.8% in 2017 .

The decline in the growth rate of the global economy and the increase in the severity of trade barriers had the greatest impact on the decline in the rate of growth of international trade, reaching 1% during the first half of 2019, which is the slowest rate in international trade since 2012, according to the estimates of the International Monetary Fund in his report on the prospects The global economy by the end of 2019.

It was natural for the weak economic growth rate to cast a shadow on financial policy makers, as the majority of the world - led by America, China and Europe - tended to reduce the interest rate in banks in order to revive domestic demand, to stop the negative effects of the decline in the rate of growth.

But the last weeks of 2019 witnessed two important events, namely the announcement of the imminence of the United States and China reaching a partial agreement to end the commercial fees crisis between them, which led to the improvement of some economic indicators in the global stock exchanges and the global oil market, and the second thing the Conservative Party won the elections in Britain , And his announcement of resolving the issue of exit from the European Union.

However, the specter of the global financial crisis expected in 2020 still hangs over the global economy, especially in light of the negative repercussions of the rise in the global debt crisis that the International Finance Institute expects to jump to $ 255 trillion by the end of 2019, and more than three times the global GDP. This indebtedness includes the indebtedness of governments, companies and families.

Conflicts deplete the economies of the region
There are a set of challenges facing the economies of the region during 2020, chief among them the challenge related to the negative repercussions of armed conflicts, especially after the Egyptian-Turkish escalation regarding Libya, which means that the region is likely to be at the forefront of the countries with the highest spending on armaments between countries of the world as they were during the years The past will undoubtedly be at the expense of development, and a deduction from the standard of living of individuals.

The movement that witnessed in 2019 or what was called the second wave of the Arab Spring showed the economic challenge facing the governments of the movement countries, namely Sudan, Algeria, Lebanon and Iraq, as the economic motive for the movement was prominent in the demands of the demonstrators in these countries.

Without democracy and free and fair elections, it will be difficult to achieve the demands of mobility in these and other countries of the region, from social justice, the fair distribution of wealth, and the eradication of corruption.

And if the expectations of the International Monetary Fund go for oil countries in the region to achieve a growth rate of 1.3% during 2020, the performance of the oil market puts the economic policy maker at a loss, either to take advantage of the improvement in oil prices recently to address the budget deficit, or commit to a policy of reducing Production thus faces a budget deficit.

The Arab oil economy not only faces the challenge of prices and requirements of the oil market, but it also faces other negative repercussions, such as the reluctance of foreign direct investment from the region, especially after the Gulf oil states were involved in several direct wars and conflicts in the Middle East region, and the austerity measures experienced by societies Arab oil has negative repercussions that are not expected to be released in the medium term.

It remains to be emphasized that the Middle East region in general, and the Arab region in particular, will be more difficult during 2020 to expect it to enter into a regional economic entity that seeks to develop or improve its position on the map of the global economy. The region is contested by several non-Arab projects, and the Arab project has no support.

The Islamic ocean is not considered far from the Middle Eastern or Arab ocean, although the Islamic Summit Five - held in Malaysia in December 2019 - is expected to be the nucleus of an Islamic economic project, but the reality remains to believe or deny these aspirations.

Turkey, which is the real nerve of this gathering, faces many challenges on various levels, although the Turkish economy has witnessed a remarkable recovery during 2019, but since the announcement of its agreement with Libya, its currency has declined by about 20 piasters against the dollar.

Iran, which is an important figure in the equation of the Middle East region, enters in 2020, and its president Rouhani declares that his country’s conditions are the most difficult in the forty years in economic terms, due to the negative repercussions of imposing US economic sanctions on Iran.

Conflict of interest
There are expectations that the partial agreement that is expected to be concluded between America and China regarding their trade dispute will be the beginning of ending the conflict, but the fact is that both parties have their economic interests at the local and international levels, and will employ the issue of customs duties in light of them.

The Chinese ambition has no borders, while the American policy towards the role of China in the global economy focuses on remaining confined to the production of traditional commodities and limited technology industries, while America remains the technology sponsor in the world, and the difference between the domestic product of the two countries reflects the results of this policy America’s GDP is about 21 trillion dollars, while China is around 12 trillion.

This does not mean that China recognizes these data to America, but it is aware that the technology struggle is the last barrier to be released on the map of global economic powers, and therefore we find that its educational missions to America, Canada and Europe are constantly increasing, as well as focusing its investments in the technology sector.

There are other areas of the US-China conflict, the most prominent of which is the Chinese economic expansion in various places in the world by providing loans to governments or entering into Chinese investments in different countries.

It may seem calculated by America for this Chinese presence, as is the case for its presence in the Egyptian economy, the Gulf states and Africa.

And China accepts this quiet expansion so that it can reach the stage of being part of the backbone of these economies and it is indispensable as America did before in the countries of Southeast Asia.

But at the level of the two countries, America and China, their internal challenges remain in 2020, as America constantly strives to keep growth rates high, unemployment rates remain low, and it appeals to businessmen, especially in light of the coming presidential elections this year, and the aspiration of President Donald Trump For a second presidential term, despite the measures he faces, to remove him.

China also has major problems regarding its domestic debt crisis and corporate default, as well as addressing the negative effects of the US tariff crisis imposed on Chinese products.

British loosening
Upon the establishment of the European Union monetary union in 2000 and the issuance of the euro as a single currency, Britain stipulated that it reserve its currency, due to the historical and indispensable necessities of that. After the global financial crisis in 2008, Britain was calling for a review of the global financial institutions system. And the search for a new financial and monetary system that goes beyond the rules of the International Bank and Fund in 1947.

Britain's exit from the European Union is a decision governed by purely economic interests, despite the cultural and historical importance that Britain represents for the Union, but it saw in the European Union a heavyweight with weak economies, and that it pays development bills to other countries, especially after the inclusion of about ten European countries to the Union at the beginning of the third millennium.

We should not read it as the beginning of the European Union's demolition, as historical experience guides us that Europe treats its problems as solvable and not the beginnings of demolition.

Account and accountability
The accounts of the years to receive and end them remain inspiring in countries aware of the importance of time. Democratic governments find themselves obligated to their living people to submit an account statement of the past and a plan for what is to come.

But the matter in our Arab region or in our Islamic nation is not like that. Paper plans for the requirements of media appearance and political decoration. How many plans and strategies were presented to parliaments and peoples related to the year 2020 in the Arab and Islamic regions, but no one feels accountability from the governments in those countries for two things, the first: The absence of the role of oversight bodies, as well as the absence of oversight by civil society, and the second: that peoples, business and civil society organizations do not remember these plans and strategies, because on the day they were received, they did not trust the seriousness of governments in working with them.