In what follows, we describe the dislocating developments of this year and then explain how each of them will probably precipitate major consequences.
The general view of the prospects for the new year is a benign one. Forecasters acknowledge the downside risks but feel confident that these can be contained or offset by offsetting positives. The bias to the more upbeat view is understandable because the positive drivers, such as less uncertainty over tariffs, fiscal and monetary easing across the globe, and lower oil prices, are visible, whereas it is not clear how imminent or likely or impactful the downside risks will be.
The more cautious view — which we agree with — thinks that the consensus is under-appreciating that it takes time for the big dislocations of this year — geopolitical frictions, the trade war, accelerating technological changes and financial market feverishness — to produce their full consequences. It is therefore quite possible that the coming year will see some of the pressures that are building up burst and crystallise groundbreaking changes.
