Wednesday, June 26, 2019
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< view full issue: Readjustment or economic crisis for this 2019
Mario Hernández Zambrano

​2019 will be a year to look out for

Colombian businessman

The outlook for the world economy is worsening and there is an idea, getting more and more widespread, that in 2019 it will slow down, and it seems that it will be so, due to the uncertainty and reaction of the markets in the last days of the previous year, the sharp fall in oil prices, the uncertainty in Europe over Brexit, the poor state of France and Italy and the so-called 'closure' of the Trump administration over Congress's resistance to approve 5,000 million dollars to build the hateful wall on the border with Mexico.


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But not only that. According to the most optimistic calculations, the commercial tug-of-war between the United States and China will continue in 2019, which is a risk, not only for trade and global growth, but also for the financial conditions and the price of raw materials, determining factors in the evolution of economies such as in Latin America.


Consequently, we are already talking about a fall in international trade. To the foregoing, it we have to add that the Federal Reserve's decision to raise the interest rate will increase the external debt of many countries.

According to the latest ECLAC report, commodity prices registered an increase of 10 percent in 2018 as a result of an increase of more than 20 percent in the price of oil and of 3 and 5 percent in the price of agricultural products and metals respectively.


Nevertheless, in 2019 there will be a reduction of about 7 percent in the prices of basic products, including crude, which will drop 16 percent.


According to these forecasts, Latin America's growth will remain at less than 2 percent, below the world average.


The large economies of the zone (Mexico, Brazil and Argentina) will suffer this world instability strongly, even Argentina will decrease, while Mexico will continue to put up with Trump's whims, and the new government of Brazil will have to show what it is capable of.


Venezuela will continue with a 10 percent drop, more poverty, out-of-control inflation and higher unemployment.


With a drop in trade, low oil prices, higher interest rates, less credit and political problems in several countries, 2019 does not seem as if it will be a good year for Latin America, but it also shows that opportunities are not being taken advantage of.


For example, how good would it be if the Pacific Alliance bloc (Mexico, Chile, Peru and Colombia) had consolidated themselves as a business and integration option beyond mere discourses and promises.


Unfortunately, not enough effort has been made to put this into practice, and this year the concern will be to protect themselves from global uncertainty and there will not be time for anything further.


What is expected for Colombia in the short term is acceptable. The approval of the Law of Financing, the increase in the minimum wage and the desire of President Iván Duque to create an environment of tranquillity, good manners and non-polarization are positive signs that should be encouraged, because what is at stake is much more, in terms of country, that a few results of conjuncture. It is the future of the model of freedom, which other nations have committed themselves to at quite a high cost.

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