Were my predictions for 2020 at all accurate? Let's find out!
At the start of each year I have the fun tradition of making three predictions about the coming year, and the much less fun tradition of evaluating how wrong last years predictions were. If you haven’t read my predictions for 2020 you can find those here. Given how grossly overused the expression “unprecedented” was in 2020 there could be an argument for being a bit less harsh for 2020 than for a more normal year but I think giving myself slack when evaluating my predictions for not seeing a major global event coming would be wrong. As I said in my 2019 Predictions Revisited post; “Amusingly, my only correct prediction was that I’d be wrong in my predictions” which is shaping up to be a standard feature of this little exercise, less so this time around but still.
My first prediction for 2020 was that there wouldn’t be a meaningful trade deal between the US and China, which I operationally defined as “one which lowers tariffs for both sides on several industries by at least five percentage points”. Shortly after I wrote my predictions for 2020 an agreement for a “phase one trade deal” was reached between the US and China which included lowering and indefinite suspensions of tariffs which doesn’t meet the standards I set out in my definition of a meaningfultrade deal, but was not insignificant. The US agreed to lower a certain set of tariffs by 7.5 points but China didn’t lower any tariffs on the US; both parties agreed to indefinitely suspend planned impositions of new tariffs but I wouldn’t consider that a lowering of tariffs as they were never in effect. This prediction is sort of a mixed bag, I was technically right but I was perhaps right due to making an overly specific prediction rather than due to my knowledge of trade policy.
My second prediction for 2020 was that global interest rates would fall which, arguably, makes me right a second time. Official central bank interest rates have not been lowered in 2020, though central banks’ asset purchasing programmes have expanded which lowers the yield which I would argue makes me right in spirit if not in practise. Though, to be fair for the last couple of years predicting that interest rates will be lowered has been just about the least bold prediction one can make.
Finally, my third prediction for 2020 was that oil prices would, on the whole, rise. This was nothing short of an abject failure, oil prices have fallen not only due to the pandemic but also due to OPEC+ production cuts. The basis of my prediction was that petrostates in the Gulf and north Africa can’t sustain their current levels of social spending and their subsidies at current oil prices. In the medium to long term I still think something has to give, either the low oil price or the stability of petrostates but I won’t try to specify when again.
Next week I’ll be back for this year’s predictions, as I’ve proven rather bad at predictions in the past I hope to at least make them entertaining and thought-provoking.
Written by Karl Johansson
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Cover Photo by Steve Johnson from Pexels, edited by Karl Johansson
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