Economy

Events that shook the global economy in 2019

hong kong protester holding sign business news

From political turmoil to threatened ecosystems, here are the biggest business and political news stories that impacted the global economy in 2019.

2019 Hong Kong Protests

What: The Hong Protests also known as the Anti-Extradition Law Amendment Bill (Anti-ELAB) are an ongoing (at the time of this story) series of demonstrations that were triggered by the introduction of the Fugitive Offenders amendment bill by the government of Hong Kong. Till date, over 6000 people have been arrested, 2600+ injured and two people have lost their lives in the protests.

When: The demonstrations began on 15 March 2019 with large scale demonstrations breaking out from 9 June 2019 onwards.

Why: The main concern was that the introduction of this bill would not only undermine the region’s autonomy but also impinge on civil liberties of the people of Hong Kong. While the bill has been withdrawn, there have been ongoing protests demanding greater freedoms and inquiry into alleged police brutality.

What Impact did the Hong Kong Protests Have?

Hong Kong’s GDP in the third quarter shrank 3.2% from the previous quarter. The tourism and retail industries were hit hardest. Hotel vacancy rates hover around 60%; Cathay Pacific reported a sharp drop in passenger numbers and even Qantas predicts that the protests would hit their first-half earnings by US $17 million.

Saudi Aramco Attack

What: Twenty-five drones and missiles were used to attack the state-owned Saudi Aramco oil processing facilities at Abqaiq and Khurais in Saudi Arabia. Abqaiq is the world’s largest oil processing facility and crude oil stabilization plant with a processing capacity of more than 7 million barrels per day (bpd). And Khurais, which lies about 110 miles southwest of Abqaiq, has capacity to pump around 1.5 million bpd.

When: In the early hours of September 14, 2019.

What Impact did the attack on Aramco have?

The drone attacks temporarily crippled Saudi Arabia’s oil facilities and its immediate fallout was seen in the form of a global surge in crude oil prices. In a statement, Saudi Aramco, said the damage caused by the drone attacks cut the country’s oil output by 5.7 million barrels every day, which at the time was estimated to be more than 5 per cent of the global oil supply.

However, facilities at both sites resumed processing at near full capacity, by October 12 according to official reports.

Read: Aramco Showcases Major Recovery Post Oil-Attack Within A Month

On December 11, Aramco listed on the Saudi stock exchange. And after four days of trading, on December 17, shares close at 38 riyals ($10.13), giving the company a market value of $2.03 trillion.

Boeing 737 MAX groundings

What & When: The Boeing 737 MAX groundings began in March 2019, after two fatal accidents befell the airliner within a span of five months. The first accident was the Lion Air Flight 610 on October 29, 2018.

In December 2018, studies by the FAA and Boeing concluded that MCAS (Maneuvering Characteristics Augmentation System) posed an unacceptable safety risk. But before Boeing released any fixes, Ethiopian Airlines Flight 302 crashed on March 10, 2019, killing all 157 passengers and crew aboard the aircraft.

Impact of the Boeing 737 MAX groundings

As of December 2019, the grounding has lasted for 9 months.

In early November, certain airlines based in the United States announced that they would extend their grounding of the Boeing 737 MAX to March 2020. Southwest Airlines and American Airlines are two of the operators that decided to schedule services from March next year. Incidentally, between the two companies, a total of around $1 billion has been lost due to issues surrounding the 737 MAX.

The suspension has undoubtedly caused operational and financial strain on carriers across the globe. The Middle East in particular faced its own set of challenges.

For instance, after signing for 225 Boeing 737 Maxes worth $27 billion at Dubai Airshow 2017, Flydubai was clearly impacted by the grounding. It reported a 2019 first-half loss of $53.6 million, 38 percent down on the previous first half. While revenues held stable, available seat kilometers fell 14.9 percent, and passenger numbers dropped 7.5 percent to 5 million.

In September, an ‘irked’ Emirates President Tim Clark delivered a broadside against Airbus and Boeing as well as their biggest engine suppliers, saying he’s no longer prepared to take delivery of aircraft that don’t meet specifications.

Emirates cut back its billions dollar commitment with Boeing, purchasing just 30 Boeing 787-9 aircraft worth US$ 8.8 billion at the Dubai Airshow 2019.

Boeing’s incoming boss David Calhoun faces a daunting task when he takes over as chief executive officer in January 2020. On top of the grounding of its best-selling plane, Boeing has suffered production stumbles with its KC-46 tanker, delays to its 777X jetliner and an embarrassing mishap that caused its new space capsule to miss a rendezvous with the International Space Station.

It, of course, remains to be seen how Calhoun handles the future of Boeing. He certainly has his work cut out for him.

Global Warming and Threatened Ecosystems Worldwide

This year’s August Amazon fires grabbed headlines around the world. 2019 Amazon rainforest wildfires season saw a year-to-year surge in fires occurring in the Amazon rainforest and Amazon biome within Brazil, Bolivia, Paraguay, and Peru. The increased rates of fire counts in 2019 led to international concern about the fate of the Amazon rainforest, which is the world’s largest terrestrial carbon dioxide sink and plays a significant role in mitigating Global Warming.
Venice endured record levels of prolonged flooding caused by a 1.87-meter-high tide on November 12, the highest in more than 50 years. The city mayor said total damages were estimated at around 1 billion euros, with houses, businesses and historic monuments severely hit.
Iceland marked its first-ever loss of a glacier to climate change in August 2019.

Read: Australia’s bushfires are getting worse. And climate change is to blame

From coral reefs flickering out beneath the oceans to rainforests desiccating into savannahs, nature is being destroyed at a rate tens to hundreds of times higher than the average over the past 10m years, according to the UN global assessment report.

From our archives: Top polluters head to global climate talks: Here’s what to expect

Impact of global warming on economies

Warmer temperatures, sea level rise and extreme weather damage property and critical infrastructure, impact human health and productivity, and negatively affect sectors such as agriculture, forestry, fisheries and tourism, according to research reports.

A 2018 study found that over 4,000 miles of fiber optic cable as well as data centers, traffic exchanges and termination points — the lifeblood of the global information network — are at risk from sea level rise. When these were built 25 years ago, climate change was not a concern, so while the cables are water resistant, they are not waterproof.

It has been reported that 215 of the world’s 500 biggest companies could lose an estimated one trillion dollars due to climate change. For example, Alphabet (Google’s parent company) will likely have to deal with rising cooling costs for its data centers. Hitachi Ltd.’s suppliers in Southeast Asia could be disrupted by increased rainfall and flooding.

Sixty-three percent of financial risk managers surveyed now believe climate change is a major concern. As a result, “The total value of funds that have integrated environmental, social and governance factors into their investment process has more than quadrupled since 2014, rising to $485 billion as of April,” reported the Wall Street Journal.