According to Wikipedia, “May you live in interesting times” is “an English expression which purports to be a traditional Chinese curse. While seemingly a blessing, the expression is normally used ironically, with the clear implication that ‘uninteresting times’ of peace and tranquility are more enjoyable than interesting ones, which usually include disorder and conflict.”
Few will disagree that we now live in “interesting times” replete with social, political, global and even existential turmoil. These unsettling circumstances include the rise of populism and the related election of unconventional national leaders, the prolonged political and cultural civil war within the United States, the decline of globalism’s appeal, the rise of China and the return of geopolitical conflict between two major powers, Brexit and the challenge to the European Union’s stability and the supposed existential threat of climate change that some say will soon leave all of us deep-fried.
None of these will be resolved as the year 2020 approaches, nor will there be a return to business as usual as most of us have known it since the start of this century. Turmoil will continue to be the order of the day as we pass through this historic transition till it settles to a new normal. What that new normal will be is difficult to see with 20/20 vision, as the quest for certainty will be an exercise in futility. Thus, in the spirit of Christmas, let’s just pause for a moment of fun and bet on possible outcomes involving some of these stressful situations.
First, US-China trade relations: Will the current trade war be resolved in the coming year? My bet is no, not quite. Some say that President Donald Trump needs a deal more than China does since some important sectors of the US economy are hurting economically from this war and would thus turn against him in the forthcoming November elections. Others opine that using China as a rallying villain is popular to most Americans, and it would therefore be more politically astute for him to maintain a tough stance. The fact, though, is that while a continuing trade war will have negative effects for both sides, these are likely to be manageable. The maximum effect to the Chinese economy of a total halt of Chinese exports to the United States is estimated to be about 2.4 percent of its GDP, while a total halt of US exports to China will only amount to 0.5 percent of US GDP. Meanwhile, back here, China is now the largest trading partner country of all Asean countries except Laos, and a more important export destination than the United States in seven out of 10 Asean countries. The march toward transforming this century into an Asian century, with China taking a leading role, appears to be on track. Shangdan Kuai le (Merry Christmas in Mandarin)!
Second, Brexit: With the dominant victory of Boris Johnson in the recent UK elections, Brexit will undoubtedly happen. But will its effects be positive or not? My bet is that Brexit will not be catastrophic. A special trade agreement between the United States and United Kingdom is likely to become a reality. The United Kingdom will also likely expand its trade relations with Commonwealth countries like India as well as the rest of Asia, including the Philippines, thus placing its bets on increasing trade with the far larger Asian markets than mainly Europe. Jolly good!
Third, US politics: My bet is that while President Trump has been impeached by the Democrat-led US Congress, he won’t be ousted as president. Should he face any of the current crop of far-left aspirants from the Democratic party as his opponent, his chances of reelection would be enhanced.
Finally, on the home front: My bet is for a continued strong economy, with about 6-percent GDP growth as well as a relatively stable currency that would not likely weaken below P52 to the dollar. I also think that by midyear, the increasingly interesting betting exercise will involve succession planning and the likely set of presidentiables. Start placing your bets, folks—but meanwhile, have a Merry Christmas!
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Roberto F. De Ocampo, OBE, is a former finance secretary and was Finance Minister of the Year in 1995, 1996 and 1997.
Business Matters is a project of the Makati Business Club ([email protected]).
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