In the first half of 2021, as the global epidemic situation improves, the world economy has gradually recovered, but it has shown a significant divergence and imbalance. The accelerated recovery of international trade, investment and manufacturing, the monetary easing policies and shifts of developed countries are expected to bring certain fluctuations to the global financial market, the economic environment inside and outside emerging markets and developing countries is more fragile, and the global supply chain shortage crisis is becoming more and more prominent. . In the future, the epidemic will still directly affect the progress of world economic recovery. The challenges facing developing countries cannot be ignored. The international community urgently needs to work together to promote global economic governance to play a more active role in responding to global challenges.
1. Characteristics of world economic development in the first half of 2021
The world economy gradually recovered in the first half of the year. Since 2021, with the acceleration of global vaccination and the successive lifting of blockade measures by various countries, the recovery of the world economy has remarkably improved. Major international economic organizations have raised their forecasts for global GDP growth in 2021. The World Bank recently estimated that the global economy will grow by 5.6% this year, an increase of 1.4 percentage points from the beginning of January; the Organization for Economic Cooperation and Development (OECD) predicts that the global economy will grow by 5.8% , Higher than the 5.6% predicted in March; the International Monetary Fund (IMF) also increased the global economic growth rate from 5.5% predicted in January to 6%. The recovery of global manufacturing and trade is accelerating. According to JP Morgan Chase, the global manufacturing PMI index has rebounded to 56 in May 2021, setting a new high since March 2011. In addition, according to the United Nations Conference on Trade and Development (UNCTAD), global trade in the first quarter increased by 10% year-on-year, and global trade volume for the whole year is expected to increase by approximately 16% year-on-year. Global investment will also bottom out and rebound. According to the “World Investment Report 2021″ released by UNCTAD, global foreign direct investment is expected to increase by 10% to 15% year-on-year in 2021, but it will still be 25% lower than the level of foreign direct investment in 2019. about.
Volatility and vulnerability of global financial markets have increased.
In the first half of 2021, in response to the epidemic, developed countries such as the United States, Europe and Japan continued loose monetary policies and fiscal stimulus policies. However, with the recovery and growth of the world economy, the market’s expectations of global inflation and the Fed’s monetary policy shift have risen, and financial market volatility has become weaker. Vulnerability has increased. Under the influence of multiple factors such as the United States and other loose monetary policies and rising demand, the prices of bulk commodities have risen rapidly, and prices of major commodities have basically returned to their pre-epidemic levels. For example, international oil prices have risen above US$70, recovering all the declines after the outbreak, and prices of agricultural products, copper, steel and other raw materials have also risen sharply. Inflation rates in the United States, the Eurozone, etc. have risen. The monetary policies of developed countries have not yet shifted. The central banks of emerging economies, including Russia, Brazil, and Turkey, have all raised interest rates, taking the lead in opening the interest rate hike cycle to cope with the rapid rise in commodity prices. The dual pressures of inflation and capital outflows.
The global supply chain is experiencing a crisis of shortage.
With the improvement of the epidemic situation and the recovery of the world economy, the global supply chain that was interrupted in the first half of 2020 will gradually resume operation. Entering 2021, with the uneven recovery of the global economy, the global supply chain is encountering new challenges. At present, both the raw materials such as copper, iron ore, and steel, as well as the middle and downstream industries such as chemicals, rubber and plastic products, semiconductors, automobiles, and consumer electronics, are experiencing price increases and supply shortages. The main reasons for the tension in the global supply chain include: First, due to the repeated epidemics in some developing countries and the implementation of blockade measures, the normal supply of raw materials, the normal production of semiconductors and other manufactured goods, and the transportation and logistics are all negatively affected. For example, as an important country for chip packaging and testing, Malaysia’s recent implementation of the country’s closure measures has aggravated the semiconductor shortage to a certain extent. The second is a strong recovery in demand from economies such as the United States and China. Among them, the United States has adopted large-scale fiscal stimulus policies, and the private sector’s demand for commodity consumption has increased day by day. At the same time, it has also led to rising prices of bulk commodities. Some companies have begun to stock up more than expected, which has exacerbated the tight supply of raw materials and intermediate products.
2. The world’s major economies are showing a trend of differentiation and recovery
At present, the recovery of major global economies is clearly divided. A few major economies such as China and the United States lead the world economic recovery. Many emerging markets and developing economies are still suffering from the new crown epidemic and their economic recovery is slow.
First, China and the United States are leading the global economic recovery.
China’s economy is showing a strong recovery trend. In the first quarter of 2021, China’s GDP will grow by 18.3% year-on-year. The World Bank predicts that China’s economy will grow by 8.5% for the whole year. China’s foreign trade has also continued to improve. In the first five months of this year, China’s total import and export value increased by 28.2% year-on-year. Even compared to the same period in 2019 before the epidemic, the growth rate was as high as 21.6%. The U.S. economy is showing a clear momentum of recovery, with real GDP growing at an annual rate of 6.4% in the first quarter. The recovery of the US economy has benefited from the acceleration of vaccination and the increase in consumption of goods and services and non-residential investment in the context of fiscal subsidies. The increase in the trade deficit has caused a drag on the economy.
Second, the economies of the Eurozone and some Asian economies have gradually improved.
Due to the worsening of the epidemic situation and the implementation of blockade measures, the economy in the Eurozone fell by 0.6% in the first quarter of this year, and GDP grew negatively for two consecutive quarters, falling into a technical recession. However, with the acceleration of vaccination and the lifting of the blockade measures, the Eurozone economy has shown signs of recovery. The manufacturing PMI index has continued to increase since April, and hit the highest level since the survey began in June 1997. The consumer confidence index rose to the highest level since June 1997. -3.3, the highest since January 2018. The economies of South Korea, Singapore, Vietnam and other Asian economies have also improved significantly. For example, South Korea’s GDP in the first quarter increased by 1.6% from the previous quarter, which has returned to the level before the epidemic.
Third, there are still many countries where the epidemic has returned. Coupled with factors such as lagging progress in vaccination, economic recovery has been severely constrained.
As the world’s third-largest economy, Japan’s economy fell by 1% in the first quarter of this year, shrinking for the first time in three quarters. Faced with the fourth wave of the epidemic since April, Japan has continued to extend its state of emergency, affecting the process of economic recovery. Among the emerging markets and developing economies, major ASEAN countries such as the Philippines, Thailand, Indonesia, and Malaysia experienced negative GDP growth in the first quarter, especially Malaysia, which was hit by a new round of epidemics. Economic recovery will continue to face obstacles. The World Bank will also resume this year. Downgrades forecasts for Malaysia’s economic growth in 2021. In addition, in the first half of this year, India and Brazil were in the middle of the second wave of epidemics, and the future economic recovery will still face greater pressure.
3. Outlook for the future world economy
First, the development of the epidemic and the progress of vaccination are still the direct factors affecting the future recovery of the world economy.
At present, the new crown epidemic is still raging around the world. Some countries continue to adopt lockdown measures to deal with the epidemic. The recovery of economic activities is hindered, especially in emerging markets and developing economies with weak medical and health conditions, slow vaccination rates, and repeated epidemics that increase uncertainty. Not only does it hinder the country’s economic recovery, but it also has a negative impact on the normal operation of the global industrial chain and supply chain.
Second, emerging markets and developing economies face obstacles to recovery.
The loose monetary policies of the United States and other developed countries will bring negative spillover effects. Developing countries will continue to face economic and financial risks such as rising commodity prices, inflation, and capital outflows. Increased financial market volatility will restrict the economic recovery of developing countries. In addition, developing countries themselves also have many structural problems, including a single industrial structure, a high degree of dependence on foreign trade, and high debt risks. When the global economy encounters setbacks, the road to recovery for developing countries is even more difficult.
Third, the digital economy and green development lead the recovery and growth of the world economy.
The epidemic has also had an important impact on global industrial adjustment. Major economies such as the United States, China, and Europe all regard digital and green economy as an important focus of economic growth. In the context of the epidemic, the digital economy represented by new-generation technologies such as artificial intelligence, cloud computing, and big data analysis is booming, and the digital transformation of industries will become a new engine for global economic recovery. Green and low-carbon economy have also received widespread attention. For example, the European Union regards green transformation as a new growth strategy for the European economy. The Biden administration in the United States also attaches great importance to issues such as green infrastructure and climate change. In the future, industries such as new energy and electric vehicles related to the green economy will continue to develop.
Fourth, global economic governance still needs to play a more active role.
In recent years, the calls for reform of the global governance system have grown, and the epidemic has further exposed the deficiencies and shortcomings of the global governance system. At a time when the century of change and the epidemic of the century are intertwined with turmoil, the international community still needs to work together to promote the global economic governance system to play a greater role and provide new impetus to the recovery of the world economy. Countries urgently need to conduct dialogue on reducing trade protection measures, promoting international anti-epidemic cooperation, and strengthening macroeconomic policy coordination, and promote the reform of international economic institutions such as the World Trade Organization on the basis of extensive consultations and consensus building, with a view to responding to problems facing the world economy And challenges.