Overall, 2018 has been one of the most difficult years in a while as far as world economies are concerned. With a host of political uncertainties undermining efforts for many nations to grow, analysts are now worried that 2019 could lead to even more market struggles.
China and the US have embarked on a series of trade disputes throughout this year, but many of these have yet to make a real impact in terms of how they will affect businesses involved in imports and exports.
It is clear that the Chinese economy has stopped growing in the way that the world is familiar with, and China’s increase in GDP is its weakest in almost three decades. The country will likely fare worse next year, in part due to how protectionist measures will affect how much it can export to nations such as the US.
As well as the potential drop in how much China can sell to other countries without facing heavy tariffs, there is a notable worry that the country has potentially unsustainable rising debt levels that need to be dealt with. This has led to a slowdown in lending, which makes it harder for businesses to receive the money needed to continue with their growth ambitions. China’s debt is likely to threaten that the world economy could be set to follow a similar path.
Analysts from Moody’s, one of the world’s leading economic analysis companies, said in a note: ‘The drivers of China’s slowdown have yet to have their full impact on the economy, and the combination of both is unprecedented.’ This implies that there are few forecasts to call upon, given that China has not been in such a position for a long while.
Emerging markets have suffered significantly during 2018, with Turkey faring particularly badly because of its exposure to foreign debt. Cryptocurrencies have also taken a huge hit throughout the year, dropping markedly from their peak at the turn of last year.
China is one of the biggest consumers in the world thanks to its expanding middle class and tight stranglehold on the world supply chain due to how many goods go in and out of the country. Most nations will find it hard to weather any potential storms that may be on the way.
Chinese markets have also found it hard to keep going, and they entered a bear period during 2018, dropping by a quarter compared to where they were at the start of the year. Such jitters have already affected key markets globally, including the US, which originally seemed as though it would be able to ride out any issues. However, a succession of gloomy outlooks has led to the likelihood of more volatility for the country in the future.
Unless the US and China are able to find a way to negotiate their way out of the current trade impasse and agree to terms on a new trade deal by February, more tariffs are set to kick in. The effect that these will have on the economy has many analysts still guessing.