The US–China trade war will intensify
US–China relations worsened significantly in 2018 as US President Donald Trump took a hardline approach to reducing the bilateral trade deficit with China. Negotiations were in a standstill until early December, when Presidents Trump and Xi agreed to resume talks for 90 days.

This short “ceasefire” is unlikely to last, however, so the US–China trade war will intensify in 2019. Insufficient progress on key issues will likely lead President Trump to raise tariff levels on Chinese imports. The administration may even impose tariffs on an additional $267 billion of Chinese goods—encompassing essentially the entire value of Chinese imports in 2017. And while Democrats will have a majority in the US House of Representatives, the bipartisan disapproval of China’s trade practices will sustain President Trump’s trade agenda.

Beijing will also look to secure alliances, dispel growing opposition to its trade practices, and fortify its domestic economy. China will therefore focus on diversifying its trade and reducing its dependence on the United States, including pressing ahead with free trade agreements. Southeast Asian economies will likely benefit  from the trade war as US importers shift production and supply chains to avoid tariffs on Chinese goods. This move will begin the long process of restructuring supply chains (subscription required) for many companies. The International Monetary Fund (IMF) estimates that the trade war will translate to a small but significant 0.2 to 0.4 percentage point reduction in global economic output in the long term.

Bitcoin will lead the consolidation and maturation of the cryptocurrency market
Bitcoin celebrated its tenth birthday in October 2018 under clouds of doubt regarding the long-term future of cryptocurrencies. All cryptocurrencies saw a rapid price spike in 2017—and Bitcoin alone soared 1,375 per cent that year. But Bitcoin dropped from more than 90 percent of the total cryptocurrency market capitalisation in January 2016 to just a 33 percent share in February 2018 as a result of the rapid proliferation of “altcoins”. And the cryptocurrency market overall collapsed spectacularly in 2018; the 10 largest cryptocurrencies lost more than 80 per cent of their collective value between January and September.

Despite these obstacles, the cryptocurrency market will begin its second decade in a state of post-crash consolidation and maturation. By the end of 2019, Bitcoin will reclaim nearly two-thirds of the crypto market capitalization as altcoins lose their luster because of growing risk aversion among cryptocurrency investors. More broadly, financial regulators will soften their stance toward the sector. The UK Parliament’s Treasury Committee, which wants to end the “wild west” of crypto markets, will pursue regulations intended to stifle criminal activity and reduce price volatility as it tries to make the United Kingdom a hub for cryptocurrency markets. At the same time, the US Securities and Exchange Commission will warm to Bitcoin exchange-traded funds and, with the US Commodities Futures Trading Commission, will continue to work to improve market transparency.

The global anxiety epidemic will lead to a proliferation of new products
More than 300 million people—nearly 5 per cent of the world’s population—suffer from clinical depression or anxiety, costing the global economy $1 trillion each year. The problem is growing rapidly, as the global prevalence of anxiety and depression has increased by 15 and 18 per cent respectively since 2005. And the Gallup 2018 Global Emotions Report, which surveys people across 146 countries, shows that world happiness is at its lowest level since the survey was first conducted in 2006. The incredible rise in popularity of anti-anxiety products is only the beginning of a monumental consumer wave.

In 2019, there will be a proliferation of such consumer products hitting the shelves, supporting a multibillion-dollar market for treatment of anxiety disorders and depression. A vast gamut of products will be offered, ranging from affordable items such as new supplements and oils to costlier technology gadgets such as headgear and electrotherapies. Beverage companies, including producers of both wellness and alcoholic drinks, will announce new product lines featuring CBD as an ingredient. Meanwhile, the global geriatric population—in which depression and anxiety are most common—is increasing as the large Baby Boomer generation ages. And because access to health services can often be difficult or cost-prohibitive, quick-fix consumer items, regardless of efficacy, will remain the most attractive treatment options for the anxiety epidemic in 2019.

A sand shortage will grind the gears of the global construction industry
Urbanisation and infrastructure development are resulting in a global shortage of sand, the second most extracted natural resource after water. Two-thirds of construction material is concrete, which itself is composed of two-thirds sand. The global construction boom is therefore having a significant impact on global sand prices. To get a sense of scale, China used more sand between 2011 and 2013 than the US did during the entire 20th century.

In India, the construction boom is fueling not only a price spike—with reports of price increases between 100 and 150 per cent in the past two years—but also a sand mafia that has become notorious for violence. There are similar criminal groups operating in Indonesia and elsewhere in Asia.

In 2019, rising sand prices will put financial strain on the construction industry, particularly in emerging and frontier markets. This trend could lead to the slowing or cancellation of some projects. Countries such as Vietnam will be particularly sensitive, given that sand prices there rose about 200 percent in 2017 alone as the government seeks to eliminate illegal sand dredging.

Countries and construction companies—particularly those in Asia, where the illegal sand trade is receiving growing attention—will come under more pressure to demonstrate that they are complying with the law. Effects will include a further rise in legal sand prices as well as downward pressure on the global construction boom.
The looming emerging markets credit crisis will grow in both scale and scope
Some emerging markets have come under serious economic and financial stress as a result of foreign-denominated debt and currency depreciations.

An emerging markets credit crisis will unfold in 2019. China—which is owed roughly 20 per cent of African nations’ external government debt (subscription required)—will not have its debts due by the end of the year serviced, and its role as a major creditor to emerging and frontier markets will diminish as it uses its resources to limit the damage to its domestic economy caused by ongoing trade tensions with the US. Pressure on emerging markets will also mount as the US Federal Reserve increases interest rates and the dollar strengthens, raising the cost of repaying foreign currency-denominated loans. And despite a recovery in the prices of commodities, which are fundamental exports and serve as the foundation for many emerging market economies, currency depreciation for many exporters such as Zambia will prevent these countries from climbing their way out of systemic volatility. As a result, at least two more countries will join Pakistan in requesting an IMF bailout in 2019.

Africa will be more connected than ever
African countries have increased their commitment in recent years to promote regional economic integration and reduce intra-continental trade barriers. In 2016 and 2017, several countries announced updated policies for issuing “visas on arrivals” to Africans—drastically reducing the red tape required for African citizens to travel within the continent. Several airlines, both African and foreign, have already announced additional stops and flight paths across the continent. And the African Continental Free Trade

Area (AfCFTA), which has the potential to boost intra-African trade by 52 percent by 2022, was signed by 44 countries in March 2018—a number that has since risen to 49 signatories. I

ntra-African cooperation and economic integration will accelerate in 2019. AfCFTA will enter into force after the number of countries ratifying the agreement surpasses the 22-country minimum. Signatories will include South Africa, which has so far not ratified the agreement for domestic reasons. But while Africa will become more connected than ever in 2019, each of these efforts will require concerted commitments by AU member states to realise the long-term gains of improved economic connectivity.

Real-life “Iron Man” will materialize in the form of exoskeletons
Although the first exoskeletal device was tested by a team from GE and the US military in the 1960s, viable “exosuits” have failed to materialise because of weight, mobility, and power limitations. Now, after more than half a century of research and development, exoskeletons are being developed for medical, industrial, and military applications. For example, exoskeletons have enabled some paraplegics to regain long-lost mobility in the past five years. The exoskeletons reduce the strain caused by keeping one’s arms elevated for long periods of time. And in the military domain, Lockheed Martin developed the Fortis exoskeletons system in 2014 for US troops to lighten the loads they carry.

In 2019, exoskeletons will shed their sci-fi image and become popular across a number of industries. More manufacturers will follow Ford’s example by introducing and integrating exoskeletons in their production processes. New technologies such as artificial intelligence will also help address previously difficult design challenges such as functionality, weight, and mobility. Interest from both entrepreneurs and venture capitalists seeking to profit from this budding trend will prove to be an important catalyst in the technology’s growth as more start-ups are created and investments pour in. In addition, there will be a growing market for exoskeletal suits designed to support injured or weak muscles and joints—particularly as the large Baby Boomer generation continues to age. The clearing of regulatory hurdles will likewise accelerate adoption. And as the popularity of exoskeletons grows for physical rehabilitation purposes, new cybernetic treatment centers will be developed in parallel where specialists can safely use exoskeletons on patients.

The Xi–Putin relationship will be the world’s most consequential bromance
Chinese President Xi Jinping gave Russian President Vladimir Putin a “best friend” medal in June. This honour came a year after Xi received Russia’s Order of St. Andrew medallion—the highest state award. Sino-Russian economic ties have also grown steadily in recent years, in large part because of China’s growing demand for Russian oil and gas.

Xi and Putin will deepen their relationship even further in 2019. They will become more vocal critics, both together and separately, of US trade policies and other “America First” actions as they seek to portray themselves as credible alternative global leaders. Sino-Russian coordination on North Korea and other global security challenges will strengthen. The two countries will also collaborate more in the Arctic, where they have already agreed to develop trade routes jointly.

The 2019 opening of the Power of Siberia pipeline to supply China with Russian natural gas will further solidify Sino-Russian energy relations for the long term. This link, following the beginning of liquefied natural gas (LNG) shipments to China from the Russian Arctic Yamal LNG project in 2018 and growing agricultural and military goods trade, will strengthen bilateral economic ties. Growing economic, diplomatic, and military ties will increase the geopolitical importance of the Sino–Russian friendship.

The global shipping industry will crash into new sulfur regulations
The International Maritime Organization (IMO) is on the cusp of implementing new sulfur regulations that will have significant implications for the shipping industry—and the 90 per cent of global trade that relies on it. On January 1, 2020, the IMO will enforce a ban on ships using fuel that has a sulfur content of 0.5 per cent or higher (see figure 3). Ships will have the option to purchase “scrubbers” to reduce emissions from higher-sulfur fuel, but because the cost is between $1 million and $10 million per ship, it is not surprising that less than 3 per cent of the global fleet has made this investment.

Given the low level of readiness to comply with these regulations, the global shipping industry will undergo a disorderly and disruptive transition to the new environment in 2019. The implications will go far beyond the shipping industry. With every month that passes, prices for a variety of fuel types—including high and low sulfur bunker fuel, diesel fuel, and jet fuel—will be more volatile as refiners and fuel purchasers pursue a pricing advantage before the January 1, 2020 deadline. Ship owners are already sounding the alarm about fuel scarcity and the estimated $60 billion in additional fuel bills (equal to the total industry fuel spend in 2016).

The global trash crisis will spur innovations in waste management
The world became unable to ignore the unsustainable status quo in the handling of waste in 2018. Over the course of the year, China and several Southeast Asian countries imposed limits on imports of plastics. The result was shipping containers piled up outside of Asian seaports with no alternative locations to bring the world’s recyclables except landfills or illegal dump sites, including oceans and rivers. In emerging markets, nearly 90 per cent of waste is either openly burned or illegally dumped.

In 2019, innovation in waste management processes will accelerate. Government initiatives such as the Clean India Mission and Beautify Malawi will continue to improve trash collection and disposal in emerging markets. In developed markets, more municipal investment in artificial intelligence technologies and robots that can detect and sort items by material type will lead to greater efficiencies and reduced costs, allowing more recycling to occur within the markets where waste is generated. New entrants to the waste management industry will also disrupt traditional practices. Finally, recent materials science breakthroughs will take steps toward commercial viability, including those for a new plastic-like polymer that can be recycled indefinitely.