The G20 Buenos Aires Summit and Its Importance Shaping the Global Economic Prospects
The G-20 Summit in Buenos Aires became the center of important discussions and developments concerning international trade and the current state of economic globalization. The summit was defined not by a momentarily paused on the US-China trade war and the sign of the new USMCA agreement but also by a consensual understanding to call for reforms. As 2018 comes to an end, unilateral economic measures in an interdependent world have made governments struggle to keep pace and to adapt in an increasingly unstable economic environment.
Predictions of a global economic slowdown may be leading the most important economies of the world to rethink their strategies and push for multilateral decisions on the international economic system. By the end of the conference, signs of compromises were made but whether or not this attempts to find common ground will lead the world to prevent an economic downturn will depend on how the ongoing negotiations evolve and how the consensus achieved transforms into action.
The G20 Leaders’ declaration got to a united agreement on the need to “improve the rules-based international order”, opening the door for maintaining economic multilateralism and calling for a reform of the World Trade Organization. How this reform will bring and address the United States’ grievances on China’s trading practice, in the middle of a trade war, will define if the WTO can maintain its relevance and support, on a wave of economic protectionism.
“We renew our commitment to work together to improve a rules-based international order that is capable of effectively responding to a rapidly changing world”.Fith indent from The G20 Leaders’ declaration, Buenos Aires.
The success of the reform will depend on the results of the American-Chinese trade war and its already ongoing ninety-days halt. Whether both countries reach an agreement, is subject to China’s willingness to change its economic behavior on issues such as tariff and non-tariff barriers, trade imbalances, violations of the WTO mandates, mandatory technology transfers, among others complaints.
An agreement is still far from achieving, considering that China’s practices are an inherent attribute to its State Capitalism driven economy. Nonetheless, China’s significant dependence on The United States market will continue to bolster the incentives to make concessions. For now, speculation on whether this clash of economic powers gets resolve, which seems unlikely, will maintain the highly volatile world’s economy at suspense.
The uncertainty is causing the world’s economy to slow down, predictions by the Organization for Economic Cooperation and Development (OECD), concludes that economic protectionism, the US-China trade war, and rising instability is starting to take its toll into the globe’s prospects for economic growth. According to the report, China will continue slowing down to a 6% economic growth for 2020, while the American 2017 fiscal boost will wear off as interest rates rise, reducing its economic growth rate to a 2 % for 2020. Under this circumstances, the emerging world could face financial instability as capitals relocate into higher interest rates countries.
The 90 days pause and the unstable momentary equilibrium will eventually end, and within the results of a politically and economically turbulent year will gain momentum next year. How The US and China manage their trade war and their determination to compromise, will be the most important factor for the world’s economic prospects. Furthermore, this process for the rest of the world will continue to be an open window to maintain economic multilateralism, as governments become increasingly cautious to act unilaterally and work together to reform global trade.