With 2018 drawing to a close, it is time for my annual ‘Surprise of the Year’ Commentary. Given the sheer number of shocks experienced this year, it might be a bit too soon to write this issue; there are still two weeks left, and there’s no telling what might happen. A shock-weary world probably hopes to get a break. Assuming relative quiet for the rest of December, can we narrow down this year’s surprise to just one issue?
That’s a tall order; the list of high-impact events goes on and on. Take CUSMA: the negotiations provided high drama that at times had Canadian exporters palpitating. Some were shocked by the inking of the agreement, which followed a stream of high-level acidic rancour. But all along we maintained that there’d be a deal – so we weren’t surprised by the schtick, or the signing.
How about the US-China tariff spat? This is a situation with more serious potential consequences for the global economy. If the measures are a shock, the players aren’t; the US has long held that its perpetual trade deficit was in the crosshairs of this administration. So, is it an impasse? Recent talks at the Buenos Aires G20 meeting seemed to indicate movement. Meanwhile, China’s nascent interest in the CPTPP, a deal that addresses many of America’s trade grievances, adds hope for resolution. Again, the devices are more of a surprise than the direction.
Then there’s Brexit, irresolute as the end-date looms. Agreement here would be a major accomplishment, vaulting it to top choice; but alas, the odds are not favourable. As high as the stakes are, this one comes down to a multi-front coin toss: no matter how it’s sliced, opinion for and against is about a 50-50 split. Britain’s drift to the deadline was and is largely predictable.
Key elections raised eyebrows this year. The mid-point of 2018 saw AMLO capture the Mexican presidency and also legislative majorities. A few months later, Brazil about-faced by electing Bolsonaro. The US midterms wrested the House from the Republicans, promising the Administration additional legislative drama for the rest of this mandate. Germany’s reign-ending message to Merkel throws Europe’s anchor tenant into a bit of disarray. Shocking outcomes? Somewhat, but they each telegraph an abiding frustration with systems that have not addressed the core concerns of ordinary people.
Interest rate increases roiled emerging markets this year, revealing the ones that over-leveraged themselves in the decade of easy liquidity. Turkey and Argentina were under the financial market microscope, and both have managed to dodge its full wrath, but for others, there is likely more to come. Although this is unsettling, it was bound to happen at some point, and shouldn’t really have come as a surprise.
The retail revolution continued this year. Bricks-and-sticks operations gave increased ground to the online set with the fall of America’s iconic Sears marque from its perennial perch near the top of the retail heap. Wal-Mart, the current number one, is taking note. It’s transformational stuff, but hardly new.
Concern about slippage on the environment is animating the COP24 summit in Poland, due to close tomorrow. Traction is complicated by US dissent. Canada finds itself conflicted, eager to meet emissions targets but also to assist an energy market in a crisis of access that has pummelled domestic prices. A critical moment, but hardly an out-of-the-box development.
None of these events alone trumps the others for top spot. There is, however, a thread that connects them: globalization. Whether it’s the immigration laws of large trading blocs, global corporate concentration, revealed corruption, the complications of a stretched-out cycle, infrastructure needed to access foreign markets, attempts to reset tilted trade tables, or environmental sustainability, all are connected to globalization. The big shocker? Thus far, actual policy changes, like CUSMA, don’t undermine, but actually reinforce globalization. And if early signs are anything to go by, so will the China-US tariff-tiff. Add in a Brescue, not totally out of the question, and we are on a roll.
