Global economy in 2020 is expected to grow at a modest rate of around 3.4 percent in purchasing power parity terms which is below the 21st century average of 3.8 percent per year, a PwC report reveals.
In its Global Economy Watch, PwC predicts that 2020 will be a year of ‘slowbalisation’ for the global economy, with trade tensions expected to continue creating challenges for global supply chains.
Nevertheless, PwC expects that services will remain a bright spot for global trade, with the total global value of service export forecast to hit a record $7 trillion in 2020.
The US and UK are likely to remain the leading exporters of services, although China is expected to overtake France in fourth place during the year.
Moreover, PwC says the major economies will be buoyed by accommodative financial conditions and an increased reliance on household consumption as a source of growth instead of net exports and investment.
“The global volume of merchandise traded slowed down dramatically and even went into reverse in 2019… This is a period of ‘slowbalisation’—with integration and trade flows still growing but at a slower rate. Given the links between merchandise trade flows and economic growth, we can expect to see a similar effect of below-average growth in the global economy in 2020,” said Barret Kupelian, senior economist at PwC UK.
More jobs across the board
PwC expects the G7 to continue to create jobs, to the tune of around 2 million. Four out of the five new jobs in the G7 will be created in the US, UK and Japan.
As the pool of labor resources in the G7 gradually dries up, earnings will continue their upward trajectory. But in the absence of productivity improvements, corporate profit margins could be squeezed.
Similarly, the International Labour Organization expects the seven largest emerging economies– the E7–to create about 8 million jobs in net terms.