Nine of the top 10 biggest global cities will slow next year, with the stars of the US Silicon Valley showing the most dramatic signs of slamming on the brakes, Oxford Economics researchers found in a report provided to AFP.
The blockbuster growth in the world’s major cities in recent years will slow sharply in 2020 and 2021 as the global trade slowdown takes its toll, according to new research. Nine of the top 10 biggest global cities will slow next year, with the stars of the US Silicon Valley showing the most dramatic signs of slamming on the brakes, Oxford Economics researchers found in a report provided to AFP. Looking further ahead, while China’s metropolitan areas have borne the brunt of the trade conflict, they will bump US cities out of the top 10, the latest annual Global Cities Outlook said.
“The current slowdown in the global economy is impacting on the world’s major cities,” the report said. “Of the top 900, we expect that just under two-thirds, 586, will experience slower growth in 2020-21 than in the past five years.” And Richard Holt, head of Oxford’s Global Cities Research team, said the trade war’s impact and slowing commerce overall goes beyond manufacturing. Many cities are hit indirectly because “anytime anyone does a trade deal… there’s a good chance an insurance deal will be done related to that in either New York or London,” Holt told AFP.
“It’s a combination of China slowing down for its own reasons and the trade war, and in the short-term the problem in European manufacturing, and in particular the German car industry, are all coming together simultaneously,” Holt said. Some cities, such as Munich and Beijing, are cooling due to domestic economic factors. London is the lone top-10 city expected to post a modest improvement, after falling sharply due to Brexit concerns. The report projects it will recover slightly to 2.1 per cent a year in 2020-21 “from its sub-standard growth of 1.5 per cent a year in 2018-19.”
Most of the cities are tracking growth rates of their national economies, and Oxford economists use country-level GDP to calculate city growth rates, while factoring in demographics and other issues particular to each municipality. Oxford projects the US economic growth to slow to 1.6 per cent next year, and 1.8 per cent in 2021, while China dips to 5.7 per cent and 5.6 percent, and the UK to 1.0 and 1.9 per cent. American high tech cities, which have outstripped US growth in recent years, will be the hardest hit by the cooling expansion. San Jose will see its growth rate cut in half in coming years from 8.6 per cent in 2017 to 3.2 percent in 2020, the report projects.
However, for Silicon Valley, the issues go beyond the global trade war. Rising housing prices have pushed up wages and made other areas such as Austin and Portland more attractive. In Asia, China’s largest four metropolitan areas (Shenzhen, Beijing, Guangzhou and Shanghai) grew by more than 10 per cent a year in the past decade, but growth rates will slow to around six per cent in the next two years.
India’s booming cities remain at the top of the heap, with the fastest growth rates on the globe, but they are also much smaller than other major cities. Looking ahead to 2035, six of the current cities in the top 10 by GDP will still be there, and the top four — New York, Tokyo, Los Angeles, and London — will all retain their places, the report says. But Shanghai, Beijing, Guangzhou and Shenzhen will knock out Osaka, San Francisco, Dallas and Washington, although all will stay within the top 16.