Global Scenario: Risks Persist, How to Prepare?

The IMF notes in its July World Economic Outlook update that risks to growth are skewed to the downside. According to their forecasts, the global economy will grow 3.2% this year and 3.5% in 2020.

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However, he points out that next year's rebound is precarious, under the assumption of stabilization in emerging markets and developing economies and progress in trade frictions.

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From our point of view, the scenario still exhibits specific risks:

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- A hard Brexit with Boris Johnson acquires greater probabilities. This is not good news for the European economy.

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- A further slowdown in China is a latent risk. Its industrial sector shows the impact of trade frictions with the US and the exhaustion of its model based on investment and exports. His government finances have deteriorated. The fiscal deficit exceeds 4% of GDP and the indebtedness of its corporate sector is an ongoing risk. The IMF forecast for growth of 6.2% in 2019 and 6.0% in 2020 seems optimistic to us.

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- For Latin America, it expects a growth of 0.6% this year and 2.3% next. The biggest rebound is expected in Brazil by projecting that it will grow 0.8% this year and 2.4% next, without embroidering much in the reasons for the expected improvement.

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- For Mexico expect 0.9% and 1.9% for 2019 and 2020 respectively. We believe that the fall in investment and the deterioration of working conditions is a tough challenge for the Mexican economy. A rebound would be subject to the approval of the T-MEC by the US, less restrictive public spending, lower interest rates and, above all, an improvement in public policy signals.

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The IMF's recommendations to improve the global economic outlook revolve around reducing tensions and uncertainty in trade relations.

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We believe that more accommodative monetary policies globally can serve to reduce the chances of Argentine and Turkish-style financial crises.

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However, there are structural forces: demographic, market saturation, overcapacity, global indebtedness, among others, that exceed the scope of the issue of trade tensions.

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They are formidable challenges for the management of companies.

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EconoFinanzas / InterCapa will present in CDMX the program "Planning in a Disruptive Scenario" on September 12.

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The variables that will determine the business competition scenario in the next decade will be analyzed, such as identifying and managing risks and what is the fundamental strategy that management must prioritize in order to compete successfully.

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