The upcoming G-20 meeting in Argentina, on 30 November, will be marked by tensions on several fronts, in our view. On the one hand, there are the new Russian military pressures in both Syria and Ukraine. In Syria, Russia is backing the regime of Bashar al-Assad in reclaiming the last rebel-held province of Idlib. However, the rebels in the province are supported by Turkey, which managed to strike a truce during this summer with Russia to avoid another humanitarian and refugee crisis. However, this truce might have reached its end as, on 24 November, Russia claimed that the rebels had conducted a chemical attack in Aleppo, injuring 100 people. We expect Turkey to discuss the possibility of avoiding military retaliation with Russia during the G-20 meeting.
We also expect the current Ukrainian-Russian Kerch Strait crisis to be discussed informally by the attendees during the meeting, to come to a peaceful solution, but it will mostly be a EU problem as US President Trump has already hinted at a not-so-full engagement with the issue.
What the US will focus on, instead, will be the reforms on the international trade system, in our view, the key topic of this whole meeting. The meeting has arrived at a time when the US and China could not be further from the possibility of a breakthrough on the current trade war. The Trump administration has threatened to add export controls to China on several emerging technologies, which include artificial intelligence, worrying investors in the Silicon Valley. China, on the other hand, can count on its shrinking current account surplus to both show its real commitment to WTO rules and to gather allies during the meeting.
We believe that the chances of a US-China accord on trade are very few, considering that, during the APEC summit of last week, the members left the meeting without a joint communiqué, mainly because of the US-China clash over trade and security. We also believe that any significant progress on international trade reforms is very unlikely, considering all the aforementioned sources of tensions, which is all the more reason to be wary of the upcoming economic downturn in 2019E, in our view.