The road to global recovery has narrowed and decisive action is needed From World Bank economist
The following is the The road to global recovery has narrowed and decisive action is needed From World Bank economist recommended by recordtrend.com. And this article belongs to the classification: global economy .
The world economy is sailing in unknown waters and continues to face a series of shocks that may cause turbulence. Following the COVID-19 for more than two years, the conflict between Russia and Ukraine and its worldwide impact have exacerbated the decline in global growth. In this situation, we need to make a comprehensive and decisive policy response to promote growth and resolve the multiple risks facing the global economy.
According to the latest prediction of the world bank, after the transition from recession to initial recovery, the world economy is expected to experience the largest slowdown in more than 80 years. Global growth is expected to decline from 5.7% in 2021 to 2.9% in 2022, significantly lower than the 4.1% expected in January. As the conflict between Russia and Ukraine disrupted economic activities, investment and trade, and the pent up demand during the epidemic was gradually released, coupled with the withdrawal of fiscal and monetary easing policies, it is expected that the global economy will continue to maintain this growth rate from 2023 to 2024.
The growth rate of developed economies this year is expected to drop sharply to 2.6% from 5.1% in 2021. It is expected to further slow down to 2.2% in 2023, mainly due to the further withdrawal of financial and monetary support during the epidemic.
The growth rate of emerging markets and developing economies is expected to roughly halve this year, from 6.6% in 2021 to 3.4%, far lower than the average annual growth rate of 4.8% during 2011-2019. The growth expectations of 70% of emerging economies have been lowered this year, including most commodity importing countries and 80% of low-income countries.
The global outlook faces various interrelated downside risks. Increased geopolitical tensions may further disrupt economic activities and bring policy uncertainty. If this situation continues, it will also lead to the fragmentation of the global trade, investment and financial system.
Due to the conflict between Russia and Ukraine and the COVID-19, supply disruptions have led to soaring energy and food prices. Food shortages may worsen and cause social unrest. If new and more toxic virus variants appear, economic activities may be further destroyed.
The increase of negative shocks will increase the possibility of the global economy entering a period of low growth and high inflation. In the 1970s, in order to get rid of this “stagflation”, the central banks of major developed countries significantly raised interest rates, triggering a global economic recession and a series of financial crises in emerging markets and developing countries.
The current economic situation is similar to that in the 1970s in three key aspects: first, continuous supply side intervention has exacerbated inflation, while major developed economies have been implementing very loose monetary policies for a long time; Second, the growth prospect is weakened; Third, developed economies require tightening monetary policy to curb inflation, which will have a significant impact on emerging economies.
However, in other respects, the current global environment is also different from the 1970s. For example, the rise of commodity prices is lower than that at that time; The labor market is also more flexible, reducing the possibility of a long-term spiral in prices and wages. In addition, compared with the 1970s, the energy intensity of economic activities has decreased significantly, enabling the global economy to better withstand the impact of energy supply.
More importantly, unlike in the 1970s, central banks in developed economies and many emerging markets now have a clear mission to stabilize prices and have established a reliable record of achieving inflation targets in the past 30 years. Due to the improved monetary policy framework, long-term inflation expectations are not as vulnerable to rapid changes in inflation as before.
Although East Asia and the Pacific have been less affected than other regions, they cannot survive the global economic slowdown. In 2022, the growth rate of the region is expected to slow to 4.4%, 0.7 percentage points lower than the forecast in January. In some countries that rely heavily on food and energy imports, rising global commodity prices have led to increased inflation and current account deficits.
External financing conditions tightened, and the risk premium increased as the US contracted monetary policy faster than expected. From 2023 to 2024, the average growth rate in East Asia and the Pacific is expected to stabilize at 5.2%, but many countries are still unable to fully achieve recovery.
In this context, the road to sustained recovery is becoming narrower and narrower, and decisive policy action must be taken at the global and national levels. This requires joint global efforts to reduce losses caused by the conflict between Russia and Ukraine, mitigate the impact of rising oil and food prices, accelerate debt relief, and expand vaccination in low-income countries.
At the same time, countries must avoid distorting policies, such as price controls and export bans, which may exacerbate the rise in commodity prices. In view of the severe situation of increasing inflation, slowing growth, tightening financial conditions and limited fiscal policy space, the government needs to redefine its spending priorities and provide more targeted assistance to vulnerable groups.
This narrow path of recovery is another test of the resilience of the global economy. It is not easy to implement these policies and actions quickly, but delaying the necessary measures will have serious consequences. Policymakers must take immediate action, carefully adjust policies, develop a reliable macroeconomic framework, and clearly communicate the measures to be implemented. Read more: IHS: in the past five years, the global sales of seven luxury car brands have increased by 154%. Forbes : Musk’s salary in 2020 was 71billion yuan, becoming the highest in the world ceoivcrc: the transaction volume of Israeli high-tech companies exceeded 50billion US dollars from 2004 to 2013. Scotch Whisky contributed 5billion pounds to the UK every year Ipsos: how to fight inflation through innovative means East China Normal University & Princeton University: the global urban area has expanded by 80% in the past three decades. World Bank: 11 pictures review the seven soft skills necessary to become a top freelancer in 2021 Skill 3: self charging part-time economy, a perfect economic form? UNCTAD: 2021 digital economy report (238 Pages) Hurun Research Institute: Ma Huateng became the richest man in China in 2018 global rich list WTO: Global trade growth of 3.0% in 2022 inflation and supply chain pressure increased Minsheng Securities: Revelation of Japan US electronic trade friction (attached below) TMIC: 2022 electrolyte beverage trend Ren Xin mars: why would anyone buy clothes and shoes online?
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