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Business & Economic Performance In 2020

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The ongoing challenge for business owners is staying ahead of anything that may negatively affect their company and trading conditions. Analysing the PEST (political, economic, social and technology) external factors usually offer up evidence to support new goals and allow a business to plan ahead. Hence, they get a head start on any event that can be a game-changer.

At BusinessBlogs we often write on the topic of technology, and how it has revolutionised our lives and what we do commercially; however other external factors also play a core role in changing the face of business.

Economic, political or social change are equally as disruptive as technology for business so, in this blog article, we look at some of the potential obstacles that may affect business in 2020.

Economic Predictions 2020

In our research, we found this pwc article on economic predictions for 2020. It relays the outlook is ‘steady’ this year however trading across borders is likely to be as strained. The frostiness between the major global trading powers of the US and China has been an on-going theme since Trump became President however, recent events suggest there will be a reprieve in 2020.

While a trade agreement of sorts has been signed by Trump and Xi, it’s been motivated by politics so the agreement is just a pause, until after the US election late 2020. If a Democratic is elected US President, the trade agreement is likely to be rolled back as it is considered less ‘democratic’ and favours ongoing political interference.

Services

One area of globalisation that’s not been affected by trade wars is services. Global services trade is expected to hit $7 trillion, which is about a third of global merchandise trade.

Top Exporters of Global Services

The five big players in global services are China, France, Germany, UK and US. China has recently taken over the fifth position from the Netherlands. Here is a list of the top 10 countries.

  1. USA (14.3% of global total)
  2. UK (6.5%)
  3. Germany (5.7%)
  4. France (5%)
  5. China (4.6%)
  6. Netherlands (4.2%)
  7. Ireland (3.5%)
  8. India (3.5%)
  9. Japan (3.3%)
  10. Singapore (3.2%)

Brexit

How Brexit will impact the services trade for the UK will be telling. The EU absorbs the largest share of exports so if the UK is treated like non-member then businesses will need to abide by new rules. The Independent says Brexit will decimate the UK services industry.

In 2018 41% of services trade went to EU members. While the EU trade is at stake so is the preferential agreements between Japan and Canada that EU members get and the UK Brexit may terminate.

So time will tell just how the UK will perform in global services trade in the years to come, for 2020 they look to remain steady in the no.2 position behind the USA.

Economic Growth

In pwc’s article, global trade is predicted to will grow by 3.2 per cent in 2020 with all major economies growing due to favourable financial conditions. Did you know China is expected to grow at around 6 per cent, which is equivalent to adding that of Saudia Arabia to the world’s economy? True and in terms of global trade leaders, what the rise of India, which is on a trajectory to become the world’s third-largest economy behind China and the USA by 2030.

Jobs

Good news on the jobs front with 10 million new jobs expected from the G7 and emerging economies. Though China and Russia’s workforce bucks the trend with a shrinking workforce.

Population

Will the population rise? Of course and we’re living longer, so we’re an ageing population with Japan leading the way as the ‘greyest’ country. Thinking of starting a business in 2020? Consider what you can do for the baby boomers and retirees.

Summary

This year business owners need to keep a close eye on major events like Brexit, trade wars and environmental events like the bush fires, etc. Preparation is key, and it can be the difference between failure and success, therefore analyse PEST for your enterprise and change course when circumstances demand it.

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