ATLANTA — “Irksome” geopolitical factors such as Middle East flare-ups affecting oil production and capacity, kinks in the trade deal with China, post-Brexit uncertainty and the coronavirus, can all throw curveballs at 2020 economic growth prospects, says Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University’s Robinson College of Business.
Dhawan says he worries most about the coronavirus due to the unknown nature of how long it will affect the world market. The biggest economic problem now, says Dhawan, is that Chinese factory workers are stuck at home due to the virus.
Rajeev Dhawan says several geopolitical factors can throw curveballs at 2020 economic growth prospects.
“Unlike a finite event, such as a hurricane or earthquake, the coronavirus is still playing out, making it hard to assess economic impact,” explains Dhawan. “China is a vital part of the world’s supply chain for goods ranging from toys to iPhones. For an economic impact to happen, this disruption would need to last awhile, say until mid-April. When inventories run out, what will Amazon sell here? What will Apple and Samsung do?”
Dhawan released his economic forecast Wednesday, Feb. 26 during his Forecast of the Nation, held at GSU’s Robinson College of Business in downtown Atlanta.
Georgia Job Momentum Lags
Dhawan also spoke about Georgia’s job market and 2020 economic forecast. He said that while the state is still adding jobs (70,000 in 2019), the types of jobs is the concern. Looking at job additions by sector, 60 percent of jobs added last year were in the hospitality and healthcare sectors, which historically pay less than the catalyst sectors, points out Dhawan. The hospitality and healthcare sectors account for about 25 percent of the state’s employment base.
“The seeds of future growth are not sown in these two service sectors,” says Dhawan. “Growth always begins in the catalyst sectors, especially those producing high-paying jobs and creating demand for downstream services in these sectors.”
One catalyst sector, manufacturing, is dealing with trade headwinds and a weakened global economy. Stagnation in Europe is a concern to Dhawan as those countries are big buyers of Georgia machinery and industrial goods. As a result, the sector has gone from 8,400 job gains in 2018 to 1,000 in 2019.
Against that backdrop, here are Dhawan’s economic predictions in 2020:
- Georgia will add 54,400 jobs in 2020, 47,400 jobs in 2021 and 43,300 in 2022.
- Nominal personal income statewide will grow 4.5 percent in 2020, 4.8 percent in 2021 and 4.7 percent in 2022.
- Atlanta will add 41,700 jobs in 2020, 34,400 jobs in 2021 and 28,500 jobs in 2022.
- Atlanta housing permit activity on a year-over-year basis will fall 6.1 percent in 2020, decline 2.6 percent in 2021 and fall another 0.9 percent in 2022.