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Special Section: A 2020 Preview


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In 2019 we saw some incredible events unfold, leaving the world in unchartered waters. What can we look forward to in the new year and decade to come? 

As we wind down 2019 and look forward to the new year, our feature in this special double issue of WTCA Meridian looks at forecasts for six global regions – Africa, Asia Pacific, Central and South America, Europe, the Middle East, and North America and the Caribbean. The articles in this section touch on key global trade and investment trends to watch for in 2020, and include current and projected statistics and data that support insights on how each region will perform or develop.

Africa

Across Africa, economic growth has been concentrated in urban areas, providing little benefit to poverty issues in rural areas. Growth in this region in 2020 will depend on economic diversification, modernization, and strong commodity prices throughout the year. State-owned enterprises in some countries have sizeable debt that poses a contingent liability risk to already indebted governments. 

In 2020, Africa’s economic growth is expected to accelerate to 3.3%, according to the World Bank. This growth will depend on the recovery of oil production in large exporters, increased investor confidence in the region, and strong growth in non-resource-intensive economies. In 2019 growth was slow in the region due to economic uncertainty including ongoing US-China trade tensions, falling commodity prices, increased cost of public borrowing, drought, ongoing poverty, and national security.

For example, Angola, Nigeria, and South Africa — the three largest economies in Africa — have all seen low growth rates in 2019 due to lower oil production, policy reform uncertainty, and higher interest burdens. These slow growth rates have also plagued recovery in Sub-Saharan Africa as the area experienced ongoing supply disruptions and lowered external demand, as well as elevated policy uncertainty. Additionally, the region saw deadly cyclones reach the Comoros, Malawi, Zimbabwe, and Mozambique areas, which also caused large amounts of property damage and human death.

“The medium-term growth outlook continues to be constrained by a weak macroeconomic policy environment and slow policy implementation,” the World Bank said in Africa’s Pulse report in October, citing foreign exchange restrictions, high inflation rates, multiple exchange rates, and low non-oil revenues as regional obstacles. “Despite some improvements, the external environment is expected to remain difficult and uncertain for the region.”

As part of this difficult growth, the World Bank expects that South Africa will only grow 1.5% in 2020. Heading into the new decade, the country continues to experience policy uncertainty, a slowdown in GDP growth, and weak investor sentiment. The Global Business Policy Council also stated in their Global Economic Outlook 2019–2023 report that South Africa needs to improve its public finances and clean up a deep public corruption scandal in order to succeed in slowed, but continued, growth.

This growth could be possible as the Reserve Bank of South Africa’s latest quarterly bulletin showed the economy entering its 70th month of a downward cycle — its longest since 1945. Even with this ongoing contraction, the country narrowly avoided a second recession in two years, as GDP posted a 3.1% quarter-on-quarter expansion.

The country has also experienced rolling electricity blackouts in recent years. These electricity issues have highlighted the debt restrictions of South Africa’s state power utility, Eskom Holdings. The country has promised policy reforms, which would aid the struggling industry in meeting domestic demand, but has shown little sign of progress. This has left the region with market and investment uncertainty.

“The electricity sector has been a problem for years, but particularly in the first quarter [of 2019], there were really serious power cuts, and it looks like the state run electricity generator is still failing to boost output,” said John Ashbourne, senior emerging markets economist at Capital Economics. “That was still a problem in the third quarter and looks like it will continue to remain one.”

Meanwhile, Nigeria’s growth is expected to double South Africa’s at 2.0% in 2020, but the World Bank warns that the economy is still very reliant on oil production and pricing which could hinder the growth forecast. In the past year, the country’s oil production has fallen short of forecasts due, in part, to the country’s high unemployment rate, persistent terrorist threats, and corruption issues. The country has also faced policy uncertainty and oil supply disruptions, which have caused investment in new oil capacity to wane. This combined with a weak domestic demand, foreign exchange restrictions, and an overall challenging business environment has dampened growth in non-oil economic areas as well.

Further, growth in Angola is anticipated to accelerate to 2.9% in 2020, which is a strong growth rate after experiencing a contracting economy since 2016. This growth forecast reflects an increasingly favorable business climate, new oil projects coming on stream in the area, and recent growth in the non-oil sector. This return to growth will be, according to the Global Business Policy Council, thanks to the country’s economic reforms and an upswing in commodity pricing.

In other areas of Africa, growth is also expected to rise to 4.9% next year. This recovery is supported by resource intensive countries and will succeed based on investment in new oil and gas capacity in Cameroon and Ghana, and increased metal mining in countries such as the Democratic Republic of the Congo and Guinea. Growth will also be strong, according to the World Bank, in non-resource-intensive countries such as Rwanda and Uganda who have introduced successful public investment. Agricultural growth in Benin, Côte d’Ivoire and Rwanda will also boost regional growth. Lastly, Ethiopia is also expected to be the fastest growing economy in the region due to the launch of a bold reform plan and new leadership.

Asia Pacific 

The Asia Pacific region is heading into a strong economic period, although the region will likely be vulnerable to changes in global financial conditions related to Brexit, the China-US trade disputes and volatile capital flows. Elevated debt levels and sizeable fiscal deficits in countries throughout the region can be offset the easing of fiscal and monetary policy in the region. As we head into 2020, we can expect to see increased domestic demand and regional integration.

Growth in the Asia Pacific region has slowed in recent years, but it is still expected to remain the global leader in economic growth in 2020. The World Bank projects that growth in the region will stay steady at 5.9% into 2020. The impact of external and domestic headwinds, such as trade disputes, have been offset in the past year through the easing of fiscal and monetary policy in the region. Regional trade has therefore decreased due to higher tariffs, decreased global investment, and elevated uncertainty related to the trade dispute between China and the United States. In the meantime, domestic demand has increased while export activity in the region has weakened.

As the economies of Asia Pacific continue to be based on a foundation of strong consumption and investment, growth in this region will be supported by increased connectivity between national economies and digitalization. The Global Business Policy Council forecasts that regional trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Belt and Road Initiative for pan-Asian infrastructure development will be key players in both economic integration and growth.

According to the World Bank, China’s growth is expected to see a 6.1% growth rate in 2020. With the country’s recent trend of deceleration in global trade, the International Monetary Fund (IMF) forecasts that the country will introduce supportive monetary and fiscal policies to address external challenges and rein in a high dependence on debt. Meanwhile, the Conference Board forecasts China's GDP growth at 3.4% in 2020, mainly due to industrial restructuring across the nation. The country has already increased tariffs and witnessed weakened external demand in recent years.

Although this growth is expected, policy uncertainty remains high in China due to ongoing trade disputes with the United States. Possible escalation of these trade tensions could have effects throughout this region as well as globally. Likewise, de-escalation of the conflict could conversely be a boon to the region. Uncertainty surrounding control of the territory in the South China Sea has also increased regional tensions, which may hinder integration in the region and ultimately affect economic growth and diminish connectivity.

Japan’s economy is set to grow by 0.9% in 2020, according to the IMF’s October 2019 Asia and Pacific Department Press Briefing, due to its aging population. This, in addition to a pending tariff decision, could undermine growth in the region.

Although South Asia is expected to see decreased global trade and manufacturing, the region is still forecasted to experience strong growth of 7% in 2020, according to the World Bank. Domestic demand is anticipated to increase due to strong fiscal policy, particularly in India where they are expected to introduce accommodative monetary policy, and keep inflation below the Reserve Bank of India’s target in 2020. This will help India, which continues to be the fastest-growing major economy, to reach its projected IMF 2019 World Economic Outlook growth rate of 7.5% in 2020. The country has seen increased investment and domestic consumption in recent years which is predicted to continue over the next decade.

Continuing through South Asia, Pakistan’s growth is forecasted to slow further to 2.7% in 2020 due to depressed domestic demand. Bangladesh’s growth is projected to pick up to 7.4% due to strong infrastructure spending and solid private investment, and Sri Lanka is likely to reach 3.6% in 2020, though political uncertainty in the months leading up to November 2019 elections in the country could lead to an ongoing decrease in business and investor confidence in 2020 and affect growth. Meanwhile, Bhutan is likely to hold steady at 5.4%.

Southeast Asia is anticipated to see an increase in domestic demand due to favorable financing conditions, rising capital, and low inflation. The World Bank forecasts that growth will increase to 5.3% in 2020 in Indonesia with strong infrastructure spending and robust private consumption. Malaysia should see a 4.6% growth rate while their lower export activity is balanced by strong domestic demand due to low inflation and favorable financing conditions. This region may largely benefit from the supply-chain adjustments resulting from prolonged China-US trade tensions, which has led to this strong growth projection. Additionally, Thailand and the Philippines will profit from large public infrastructure projects starting in 2020 and 2021. While a good number of regional economies will continue to benefit from pan-Asian infrastructure investments and expanding intra-regional trade, many Southeast Asian countries that have strong trade relationships with the United Kingdom could be affected by Brexit in 2020, pending the outcome

Despite potential signs of weakness in the region, there is a strong economic outlook for the more developed markets in the Pan-Asian region. One example of this balance lies in Australia. While the country has seen low wage growth, which may negatively affect consumption and government spending, economic growth is expected to remain constant at around 2.8% into 2020.

Central and South America 

Central and South America’s economic growth is expected to significantly accelerate in 2020 after several years of low growth. Although it will see an improvement, the Global Business Policy Council has highlighted this region as the laggard among other emerging market regions. Throughout this region, fiscal consolidation and strong fiscal policies will remain a priority due to high public debt levels, and the need to open economies to trade and foreign direct investment. 

Economic growth in Central and South America is expected to strengthen in 2020 to 2.5% after a subdued growth rate of 1.7% this past year. According to the International Monetary Fund’s (IMF) 2019 World Economic Outlook report, the region’s slow growth in 2019 reflects challenging conditions and temporary factors, such as adverse weather conditions and earthquakes that reduced mining output in Chile and agricultural output in Paraguay. Venezuela’s ongoing economic dilemma could also have growing fiscal and social impacts on the region heading into the new year.

According to the World Bank, Central and South America can expect a decrease in net exports and an increase in import demands as trade in the region continues to expand and industrial-sector activity slows. As we head into 2020, the IMF highlights that many countries in this region have high public debt levels which will make fiscal consolidation and monetary policy a priority. Central and South America, with the exception of Argentina and Venezuela, has also seen moderate inflation rates in 2019.

“Progress has been made. Of course, you want to see the recovery before you say we have turned the corner,” Gian Maria Milesi-Ferretti, deputy director at the IMF’s research department, told Reuters. “But clearly there are positive signs. You want to re-establish the foundations for the economy to be more resilient and to avoid a more dramatic outcome if a confidence crisis turns more severe than what we have observed.”

In 2019, Brazil, which is South America’s largest economy, saw 20 consecutive weeks of growth-forecast downgrades by Brazilian economists in a central bank survey. These downgrades were largely due to uncertainty over the country’s approval of a robust pension-reform plan. This policy was ratified in November 2019, which will play a large role in preventing the government’s debt ratio from rising. This will also help the country reach the IMF’s forecasted 2.4% growth in 2020.

To boost potential growth, the IMF notes that Brazil needs decisive structural reforms, such as privatization, tax reform, and trade liberalization. Beyond these policy changes, Brazil is also expected to aid growth through an easing of labor market and credit conditions.

On the west coast of South America, Chile is expected to see robust growth at 3.4% in 2020, says the IMF. The country has accelerated several investment projects and expanded its monetary policy, which has laid a foundation for this future growth. However, the country still has many risks ahead including slowing export demands, planned fiscal tightening, and uncertainty over pending policy reforms.

Further north, Colombia is forecasted to reach 3.5% economic growth in 2020. The Colombian government announced lower corporate taxes from 2020 onwards, which should reflect an increase in investment growth going forward. Domestic demand is also expected to increase due to the country’s accommodative monetary policy, migration from Venezuela, and ongoing infrastructure projects, according to the World Bank.

Similarly, Peru could see growth of 4%, which is an increase from the IMF’s 2019 forecast of 3.7%. The country is seeing increased domestic demand, but will still face the risk of continued trade tensions, and low implementation of public investment.

While there is robust growth across most of Central and South America, the economic growth outlook is decidedly negative for Argentina and Venezuela. Argentina continues to work with the IMF to reduce the government’s budget deficit, tame inflation, and promote job growth, as it is still in a multi-year recession. The IMF projects the country will return to growth in 2020 though mainly due to a rebuilding of agricultural production and consumer purchasing power. Inflation in the country is expected to continue to fall.

In comparison, the IMF does not predict an end to the severe economic crisis in Venezuela during 2020. The country’s economy has consistently contracted since 2014, and the IMF forecasts that this will continue through to 2023 unless policy changes are made. The country has seen problems with hyperinflation that are projected to continue. These economic problems have also affected neighboring countries as millions of Venezuelan citizens continue to migrate to these regions.

Finally, impressive growth forecasts in Guyana are largely boosted by rapid development of the offshore oil industry. Additionally, Guatemala is benefiting from a fiscal impulse, which should continue to affect the country positively in 2020. El Salvador has seen increased investment, which should lead to continued growth, while continuing political tensions in Nicaragua are creating a barrier to economic activity.

Europe

The resilience of the European economy will be tested this upcoming year, but is still expected to make slow and steady expansion throughout 2020. Strong growth and strong labor markets in Central and Eastern Europe will offset the slowdown expected in Germany and Italy.

Europe’s economic outlook is positive, although momentum is slowing as it enters into 2020. According to the European Commission’s Summer 2019 Economic Forecast, growth in the first half of 2019 was stronger than expected due to mild winter weather, rebounded car sales and new fiscal policy measures, which boosted household disposable income in several Member States. Additionally, the European Union (EU) reached a trade agreement with Japan in July 2018 and continues to pursue several others, which should boost economic growth. However, as the region nears 2020, the report reflects increased economic uncertainty due to recent American tariffs on EU steel and aluminum, and ongoing uncertainty regarding Brexit.

These factors have continued to affect the manufacturing sector, which is the most exposed to international trade. This sector is projected to weaken the growth outlook for the remainder of the year and into 2020. In its quarterly forecast, the commission stated the EU is still on track to grow by 1.6%, but the eurozone's growth will slow down to 1.4%.

"The European economy continues to expand against a difficult global backdrop,” said Pierre Moscovici, commissioner for Economic and Financial Affairs, Taxation and Customs in a news release. “All EU countries are set to grow again in both 2019 and 2020, with the strong labor market supporting demand. Given the numerous risks to the outlook, we must intensify efforts to further strengthen the resilience of our economies and the European area as a whole.”

In Western Europe, the World Bank has projected 1.6% growth in 2020. Based on their report, “Global Economic Prospects: Heightened Tensions, Subdued Investment” this region will see mixed growth with Germany and Italy seeing the lowest growth rates in the area. Specifically, Italy is expected to stay flat at 0.1% growth rate, while Germany, which is the region’s largest economy, expects to see a growth of 0.5%. This disparity comes as Germany has seen lowered global demand for exports from its manufacturing sector due to ongoing trade disputes and increased tariffs from the United States. Their economy remains strong, and the German government has said that it will not be introducing fiscal stimulus packages at this time.

“The outlook may currently be dampened, but there’s no threat of an economic crisis,” Germany’s Economy Minister Peter Altmaier said at a press conference in Berlin. “Economic stimulus packages, in the traditional sense of triggering a flash in the pan, are not the right instruments” to demand further growth.

Meanwhile, France’s 2020 economic growth is expected to remain consistent with 2019 numbers. The fiscal measures in place in the country should support growth, and local political unrest and street protests are dissipating, which should add confidence to foreign investment. Further south, growth has been revised to 1.8% in Spain, reflecting strong investment and weak imports at the start of the year.

In the United Kingdom (UK), the economy is set to expand at 1.4% in 2020, which is 0.1% higher than the World Economic Outlook forecast for 2019. Brexit has added more uncertainty to the 2020 economic growth outlook for this region. While the risk of a no-deal Brexit may have been removed from the equation, there is now a December 12 election that could potentially determine the fate of the UK’s connection to the EU. The ongoing Brexit uncertainty has dampened consumer and business confidence, and led to delayed investment plans and spending. According to the Conference Board Global Economic Outlook 2020, Brexit could also create a downside for EU countries that depend the most on trade and investment in the UK, such as Belgium, Denmark, the Netherlands, and Ireland.

Separately, several countries in Central and Eastern Europe are experiencing strong growth after seeing increased wages and domestic demand for goods. For example, in central Europe, fiscal stimulus has boosted private consumption over the last year. As this region sees signs of the solidifying economic recovery, the European Central Bank is predicted to raise interest rates in the coming years. Higher financing costs could create a drag on economic growth. Investor confidence in this region could also be shaky due to ongoing policy disagreements between some Central European countries and the EU, increased international trade restrictions, and election outcomes.

According to the International Monetary Fund’s (IMF) 2019 World Economic Outlook Report, growth in Eastern Europe is expected to improve to 2.3% in 2020, with modest growth in domestic demand and a small drag from net exports. However, Poland and Romania are both likely to experience slow growth, which will be held back by their aging population and the ending of current fiscal stimulus plans.

Inflation has been trending up in this region’s larger economies, such as Hungary, Poland, and Russia, due in part by rising oil prices. Despite a boost from a fiscal stimulus package, growth in Poland is forecasted to rise to 3.6% in 2020 as slowing investment and domestic capacity constraints slow down regional activity. Ukraine is showing signs of economic recovery, although conflicts in the area could alter this growth depending on the region and escalation in 2020. This region also faces increased financing pressure as the US dollar continues to strengthen and the workforce ages.

Lastly, Turkey, which experienced stronger-than-expected fiscal support in 2019, will slow economic growth to 3% in 2020, according to the IMF’s 2019 World Economic Outlook Report. While the country is still vulnerable to higher borrowing costs and currency depreciation due to their recent geopolitical instability, it is expected to see gradual improvement in domestic demand and exports, which should stabilize growth.

Middle East

Across the Middle East, there are still political challenges and geopolitical tensions, which could pose risks for not only the economy, but also the people in the region. The region will see growth largely due to developments in oil production and exports, but that growth is largely dependent on a volatile pricing market. 

Growth in the Middle East is expected to remain steady in 2020 at 3.2%, according to a recent World Bank report. In 2019, a weak oil-sector output and oil-production cuts — that were put in place by the Organization of the Petroleum Exporting Countries and affected by United States sanctions against Iran — slowed economic growth in the region. Stable growth is expected largely due to domestic demand, a rebound in oil export, stronger infrastructure investment, and eased financing conditions. While non-oil activity in the region has increased in recent years as governments have continued to increase spending on infrastructure projects, inflation is, with the exception of Iran, contained in the region.

According to the Global Business Policy Council, growth in the Middle East will be driven largely by the recovery of global oil prices, which will also increase the region’s capacity for public investment. As such, growth among oil exporters is anticipated to pick up to 2.9% in 2020, according to the World Bank. However, this growth could be negatively affected by geopolitical tensions and the escalation of global trade tensions.

To combat this important structural reforms are necessary to help economic growth, as seen during the downturn in oil prices between 2007 and 2014, which accelerated economic diversification efforts in the region. Soon, Bahrain will join the United Arab Emirates and Saudi Arabia in introducing a value-added tax, which will diversify the government’s revenues and act as a stabilizing force if oil prices drop again. It is expected that Kuwait, Qatar, and Oman will also introduce a similar tax in the near future.

To the north, Iraq is anticipated to see some of the strongest growth in the region at 4.2% in 2020. According to panelists at Focus Economics, this growth would be due to stronger oil production, and a loose fiscal stance that also benefits the country’s non-oil sector. However, this growth could be affected by a potential escalation of protests, global oil prices, and ongoing uncertainty from tensions between the US and Iran.

Meanwhile, Saudi Arabia and Dubai are believed to continue to strengthen their non-oil economies with higher government spending. For example, these areas will be hosting two major global events in 2020 — Expo 2020 in Dubai and the G20 Summit in Saudi Arabia. Ongoing preparations for Expo have included increased infrastructure spending and more private sector investment to build accommodations. Official event-organization forecasts estimate that the Expo will bring an additional 11 million tourists to the city over six months, which will also increase economic activity. The G20 Summit is a much smaller scale event, which is not likely to directly affect the economic growth in the region, but could help profile the region and help with future investment. Overall, the challenge with these events will be to turn the short-term gains into long-term growth and investment.

To the east, growth in Iran is expected to return next year, according to the World Bank, at a 0.9% pace after experiencing a 4.5% contraction in 2019. This moderate growth will be due to stabilizing inflation and reduced impacts of US sanctions. Algeria is also forecasted to see subdued growth at 1.7% in 2020 as their fiscal consolidation depends on non-oil activity.

While many Middle Eastern countries have experienced growth, the ongoing civil war in Syria has deteriorated the country’s economy. During the first four years of the war, the International Monetary Fund (IMF) saw that nearly three-quarters of the country’s economy was destroyed, with nominal GDP decreasing from $60 to $12 billion. The country averaged an annual GDP growth rate of -15%, which is significantly different from the global year-over-year GDP growth rate of 2.8% for the same four-year period. The war has also increased unemployment and inflation, causing the migration of more than 11 million people to neighboring countries, and which has eroded investor trust in the region. This unrest will continue to weigh down the region’s overall economic growth for years to come.

Among oil importing economies, such as Egypt and Morocco, their growth depends on healthy tourism industries and policy reform. These countries are both working with the IMF and World Bank to develop policy programs that promote electricity access, structural adjustment, and increased small business entrepreneurship. According to the World Bank, growth in Egypt is anticipated to rise to 5.8% in 2020, which is an increase from 5.5% this fiscal year.

Civil strife in some other economies, such as Yemen, have also added to the difficult outlook forecasted by the IMF.

North America and the Caribbean 

Over the next year, North America and the Caribbean are projected to remain strong economic partners to many countries around the world. External factors — such as ongoing trade disputes, commodity prices, and public debt —could potentially constrict trade and economic growth.

The North American and Caribbean economies are anticipated to grow in 2020, but with great variation in rates across the region. According to the Global Business Policy Council, North America is looking to face slower growth as the United States (US) fiscal stimulus is withdrawn. Further the rebranded US–Mexico–Canada Agreement is not anticipated to affect direct economic growth, but its successful acceptance by all three countries has paved the way for increased certainty in business investment across the region, even if it has not yet been ratified in the United States.

At the beginning of 2019, North America’s economy was strong due to increased inventory accumulation, decreased unemployment rates, and higher commodity prices. Recent tax cuts in the US increased demand in the country in 2019 and boosted Canada’s economy, as it is the US’s largest trading partner. The strengthened US growth also helped the Caribbean’s tourism-dependent economies in 2019. However, ongoing trade tariff and trade-dispute uncertainty is pointing towards slowed momentum heading into 2020.

The US, which is the region’s largest economy, is forecasted by the International Monetary Fund (IMF) to see 1.9% growth in 2020, which is decreased from the 2.6% forecast for 2019. According to The Conference Board for the U.S. Economy, this slowed growth is expected due to slightly softer job growth and consumption, weakening business investment, and continued monetary easing. There will also be a federal election next year, which will,of course, have some undetermined impact on the economy and trade.

Currently, the US-China trade dispute is a large issue in this region that will continue to affect investment and trade, not only in North America, but also on a global scale. The US dollar has also recently reached one of its highest values on foreign exchange markets in decades. With this stronger dollar, the country’s export markets could be depressed in the coming years.

Despite these factors, the US economy continues to stand on relatively firm ground compared to many other large economies. The Conference Board Economic Forecast for the U.S. Economy noted that GDP will grow in the country at 2.2% next year, due to slow but steady employment growth. As job growth continues across the country and the unemployment rate stands at a 50-year low, domestic consumer demand will continue to increase.

Up north, Canada’s economic growth is predicted to increase to 1.7% in 2020, which is a slight increase from this past year, according to Deloitte Insights. This economy is still very dependent on volatile oil prices, and the weakness in the Canadian energy sector and increased protectionism abroad has led the Conference Board of Canada to report that the outlook for business investment is weak.

In recent years, the Canadian economy has been driven by increased household spending, which in turn was spurred by high home prices, low unemployment, and a large increase in consumer debt. While domestic demand has risen, exports have decreased as Canada’s economy relies heavily on trade with the US. The introduction of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) has helped Canada create additional trade opportunities. This progressive free trade agreement covers most sectors, and, according to the North American Trade Organization, 98% of EU tariff lines are now duty-free for Canadian goods and services. Statistics Canada revealed that after CETA was implemented, Canadian exports to the EU grew by just 1% in the first 10 months while imports increased by more than 12%. Due to these issues, the Conference Board of Canada does not anticipate that merchandise exports will grow this year.

Meanwhile, in Mexico, the IMF forecasts 1.9% growth in 2020, which is a significant increase from its 0.9% forecast in 2019. The lower oil prices in recent years combined with political unrest and management problems at the state-owned oil company Pemex, have hurt the country’s energy sector. The country has also faced a tough investor environment as Mexico’s labor strikes, fuel shortages, financial policies, and ongoing trade tensions with the US have increased uncertainty in the region. However, the country has maintained its 2019 fiscal deficit target. This, along with the approval of a prudent 2020 budget, will help prove the government’s commitment to fiscal responsibility and a non-increasing public debt-to-GDP ratio.

In the Caribbean, the IMF anticipates growth to pick up to 4.1% in 2020, although regional growth could be impeded by the region’s high unemployment rates, public debt, poor access to finance, and vulnerability to environmental and weather-related issues. Growth in the Dominican Republic, which is the largest economy in the Caribbean, is forecasted to remain steady at 5%.