By Isaac Cohen*
Several of the most intriguing economic questions in the New Year have to do with the prospects of the Chinese and the US economies and their mutual relations.
The US economy closed 2019 strongly, with 2 percent yearly growth, low inflation and unemployment at 3.5 percent, the lowest in half a century. True, last year’s performance was under the 3 percent growth achieved in 2018, mainly due to the vanishing effects of the tax cuts, together with the trade tensions with China and other trading partners. In an election year, the question is if the longest expansion of the US economy, which has lasted more than a decade, will continue and contribute to the reelection of President Donald Trump.
The question about the Chinese economy is if its gradual slowdown will continue in 2020 into a soft landing, or if it will end abruptly. Meanwhile, the slowdown will continue hurting the performance of those economies for which China has become the main export market, as it is the case of several South American economies, such as Brazil, Chile or Peru, also Germany and most commodity markets.
Last, this week in Washington, a truce in their trade confrontation will be signed by the United States and China. Known as a “first stage” agreement, the contenders seem to be satisfied with collecting the low hanging fruit, such as more Chinese imports of US agricultural products, with some symbolic gestures on the exchange rate, intellectual property and financial services. In exchange, the White House will refrain from increasing tariffs.
Welcome to an “interesting” year.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
