Economy grows in 2020 and wars do not matter

War - exists for almost all companies at most as a child's toy unsplash-logoSamuel Ramos

There is great uncertainty how the year 2020 will develop economically. Fear of wars is increasing. There is little reason for economic concern, as an analysis by @EurObsIT shows. 

Deloitte’s “Retail Industry Outlook” assumes that consumers will be more cautious this year. “Overall, we expect real consumer spending growth to slow to 2.2 percent in 2020 from 2.5 percent in 2019.”

This is certainly due to a change in consumer behaviour. Consumption is decoupled from wars and political instability in the world. If you mark the most significant and massive wars on the world map, it is striking that all war and crisis regions are economically marginalised.  Almost without exception, wars take place in regions where economic activity has come to a standstill anyway or has never taken place to any significant extent.  

The largest war zones are: Afghanistan, North Korea, Iran, Syria, Iraq, Pakistan, Lebanon, Egypt, Ukraine, Mexico, Nigeria, Venezuela, Yemen, Mali, Central African Republic, Congo, Myanmar, Sudan or Somalia … the list of countries where massive wars and unrest take place is long. But they are not linked to the world’s largest trading nations. Economically, these countries do not exist.

The top 10 countries and trading zones in world trade are:  China, USA, Germany, Japan, Netherlands, France, South Korea, Italy, Hong Kong and Britain.  

If one now compares the trade volumes between war zones and the rich industrial nations, it quickly becomes clear that there are indeed two economic cycles worldwide. Exports from Afghanistan to Germany amounted to around 5.58 million US dollars in 2018. Libya, after all ranked 73rd in the world in terms of exports (and by this twice as high as Afghanistan), ex- and imports goods worth around 16 billion US dollars per year in total.  

Even if one compares the volume of trade between North and South Korea (here there is a special trade zone between the two systems, the so-called “Kaesong Industrial Zone” (KIZ), this is of course small compared to the imports and exports between the rich industrial nations.  The volume of trade between the two entities is only 2.7 billion US dollars.  

By comparison, the volume of trade between Germany and Poland is around 110 billion euros. The trade volume between the Netherlands and Germany is around 180 billion euros.  Germany is the Netherlands’ most important trading partner worldwide.  It is almost exactly the same the other way round. The Netherlands is the second most important trading partner for the Germans. It may come as a surprise that Germany’s most important trading partner, the giant China, with around 186 billion euros, only slightly exceeds the volume of trade of the two relatively small countries Germany and the Netherlands.  

There is a dichotomy in the world. The rich industrialised countries have long since formed a wall of prosperity around them. There is no single global economy, there are at least two. The rich world, in which the respective countries are highly interconnected and work together, and the countries that lie in the backyard of the globe are economically disconnected. 

This is so important in terms of global politics because, as we all know, countries and their governments take action especially when their own economic interests are threatened. Where there are no economic interests, there is no need for particularly strong political and military involvement.  

Back to Deloitte. The consulting firm recommends that retailers do just that: work to change the world. This is something you can do well when you get involved in crisis regions. It is a marketing gag, admittedly. Because consumers appreciate this kind of commitment from large companies. They adjust their purchasing behavior according to whether a company also develops demonstrable activities in the social or global political arena. It is an irony of fate when retail companies earn more because of their social commitment in crisis regions, even though these wars and crises there have no consequences for their own retail business.