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Round Mound of Rebound
The global economy is poised for a modest rebound in 2020, following a year in which it notched the weakest growth since the financial crisis. Global gross domestic product will expand by 3.3% in 2020, up from 2.9% in 2019, the International Monetary Fund predicted in a quarterly update to its World Economic Outlook. The improved outlook is driven by a combination of aggressive monetary policy easing in 2019 and detente in America’s nearly two-year trade war with China. One of the biggest surprises last year was the collapse in the global volume of trade in goods and services, which went beyond just the U.S. and China to drag down trade activity and investment across much of the world. The IMF expects that to reverse in the year ahead, Josh Zumbrun reports.
WHAT TO WATCH TODAY
President Trump is in Davos, Switzerland, on Tuesday to take part in the World Economic Forum.
You can follow the WSJ’s full Davos coverage here.
A Matter of Trust
Worries about income inequality, jobs disappearing due to automation and environmental sustainability are all feeding wide-scale distrust in capitalism. Edelman, a public-relations firm, conducted its 20th annual analysis of public trust in major institutions, surveying 34,000 people in 27 countries and Hong Kong. The data reveal both skepticism about those institutions—including government, business, the media and nongovernmental organizations—and a hunger for leadership on important issues. Two key takeaways: Globally, 56% of respondents said that capitalism in its current form does more harm than good. And many people don’t believe they will be better off in five years, Kathryn Dill and Kurt Wilberding report.
Low and Slow
New overseas investment by businesses around the world fell for the fourth-straight year in 2019, pointing to a slowdown in globalization as the world-wide economy cooled. The United Nations Conference on Trade and Development expects to see little change in the flows this year. The steady drop in overseas investment signals that globalization has decelerated, Paul Hannon reports.
The Great U.S.-China Tech Divide
The U.S. and China are heading toward a world where the two global powers have mutually exclusive technology systems. While this month’s signing of a phase-one trade deal may have eased short-term economic concerns, deeply held suspicions in both countries suggest the technology gap will only widen in the coming decade. China is hastening to make semiconductors and consumer electronics without U.S. parts. Driving the American side of this conflict are not only worries about spying, cybersecurity and blackmail, but also concerns that the U.S. is losing ground to Beijing in the race to develop and implement the latest technology, Stu Woo and Asa Fitch report.
France and the U.S. struck a truce on the divisive issue of taxing digital giants, averting a trade war on the matter—at least for now. The detente comes after the French President Emmanuel Macron reached out by phone to President Trump seeking a way to end the threat of tariffs while they work out a broader accord on digital taxation, Bojan Pancevski and Sam Schechner report.
Next in line: Italy and Britain will face U.S. tariffs if they proceed with a tax on digital companies such as Alphabet’s Google and Facebook, U.S. Treasury Secretary Steven Mnuchin warned Tuesday.
Latin America Braces for More Instability
Latin America ended last year in upheaval. All the signs suggest even more turmoil in the months ahead. A wave of protests has roiled one nation after another, the byproduct of a regional economic downturn and corruption scandals that pollsters say have driven down support for governments and even democracy to the lowest levels in years. The International Monetary Fund expects Latin American GDP to expand 1.6% this year, after almost no growth in 2019, making it one of the slowest-growing regions in the world. That will likely stoke more unrest in a region where political instability is the historical rule rather than the exception, Ryan Dube reports.
Pick Up Your Socks
Whatever their working status, women put more hours into household chores and child care than men. The gender gap is most striking between unemployed men and women: Jobless women spend more than 8 hours per day on household and care work, while men spend less than 3 hours on such tasks, an Institute for Women’s Policy Research analysis shows. Women are more likely than men to be out of the labor force, and among those women who are neither working nor searching for a job, household and care responsibilities take about 2.5 more hours a day than for men of the same employment status. The gap decreases, but still persists, when women hold full-time jobs. —Sarah Chaney and Soo Oh
Global stocks dropped on Tuesday, led by Asian markets, amid concerns about the rapid spread of a potentially deadly pneumonialike virus originating in central China. The newly identified virus has spread between humans, a leading Chinese health official said, fueling concerns that the disease could quickly be transmitted across Asia. The virus has already claimed four lives as the number of confirmed cases tripled on Monday, Avantika Chilkoti and Steven Russolillo report. “The economic consequences could be extremely concerning,” said Rajiv Biswas, chief economist for the Asia-Pacific region at IHS Markit.
WHAT ELSE WE’RE READING
E-Verify, an electronic government database that checks whether new hires are eligible to work in the U.S., was meant to deter illegal immigration. Didn’t work. “In sum, while E-Verify mandates may significantly reduce formal sector employment among work-ineligible individuals, these policies are not effective in deterring undocumented migration. Moreover, the lack of gains experienced by native-born workers, the labor market distortions, and the disproportionate costs imposed on large firms suggest that the net aggregate costs associated with such mandates may be substantial,” Shalise Ayromloo, Benjamin Feigenberg and Darren Lubotsky write in a National Bureau of Economic Research working paper.
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