The IMF in its World Economic Outlook report issued late last month said the global economy would expand 6 percent this year, unchanged from its April forecast.
However, unlike in its previous report, the IMF in its latest forecast revised downward its growth prediction for emerging markets and developing economies, especially those in Asia, versus an upward revision for advanced economies.
The new forecast reflects the COVID-19 pandemic’s effects in various economies, along with changes in government policy, the IMF said.
According to the latest forecast, advanced economies are likely to grow 5.6 percent this year, more than the 5.1 percent the IMF estimated in April.
In particular, the IMF predicted 7 percent growth for the US, a marked recovery from last year’s 3.5 percent decline and an upgrade from the 6.4 percent growth it forecast in April.
Meanwhile, emerging markets and developing countries are expected to grow 6.3 percent this year, down from the previous estimate of a 6.7 percent increase.
There is a widening gap between advanced economies and many emerging markets and developing economies regarding COVID-19 vaccination rates and the ability to return to normalcy, IMF chief economist Gita Gopinath said in a blog post on Sunday last week.
More than 18 months after COVID-19 emerged, the global economy has staged a steady recovery. While the situation is uncertain given the unknown nature of the virus, the global economy has gradually improved since the second half of last year as the effects of the pandemic weakened. Most economies are on the path to recovery, albeit at different paces.
The question is why the global economy was affected only briefly by the pandemic, compared with wars or natural disasters. Bank of England Governor Andrew Bailey gave his reasons in a speech on July 2: First, COVID-19 itself has not destroyed economic capacity over the long term in the same way a war does. Second, the economic impact of the virus has been attenuated with each successive wave due to humans’ adaptability. Last, governments’ monetary and fiscal policies have significantly limited the pandemic’s long-term financial damage.
Indeed, there is stronger momentum in economic activity in many parts of the world, including in Taiwan, where local COVID-19 infections surged in May.
What deserves analysis is a question that Bailey raised: What sort of economy will exist after the fast bounce-back from COVID-19?
In Taiwan’s case, the economy in the April-to-June quarter expanded 7.47 percent from a year earlier, 0.54 percentage points faster than the Directorate-General of Budget, Accounting and Statistics’ forecast in June. This helped the economy expand 8.19 percent year-on-year in the first half of this year.
Will the nation return to the pre-pandemic pattern of low economic growth and low interest rates after the shock? Will the economy face structural challenges from an aging population and low productivity growth, as well as other underlying economic fundamentals that existed before COVID-19?
It is too soon to tell whether Taiwan’s rapid economic growth from last year to this year will be transitory, or if the growth momentum will persist and expand further. Nonetheless, more domestic investment is always welcome and the government must ensure a sufficient supply of land, water, electricity and workers.
The government has used decisive policies to respond to an unprecedented public health crisis over the past 18 months. As the COVID-19 situation in Taiwan eases, it must carefully address domestic consumption in an effective and timely manner.
US President Donald Trump and Chinese President Xi Jinping (習近平) were born under the sign of Gemini. Geminis are known for their intelligence, creativity, adaptability and flexibility. It is unlikely, then, that the trade conflict between the US and China would escalate into a catastrophic collision. It is more probable that both sides would seek a way to de-escalate, paving the way for a Trump-Xi summit that allows the global economy some breathing room. Practically speaking, China and the US have vulnerabilities, and a prolonged trade war would be damaging for both. In the US, the electoral system means that public opinion
In their recent op-ed “Trump Should Rein In Taiwan” in Foreign Policy magazine, Christopher Chivvis and Stephen Wertheim argued that the US should pressure President William Lai (賴清德) to “tone it down” to de-escalate tensions in the Taiwan Strait — as if Taiwan’s words are more of a threat to peace than Beijing’s actions. It is an old argument dressed up in new concern: that Washington must rein in Taipei to avoid war. However, this narrative gets it backward. Taiwan is not the problem; China is. Calls for a so-called “grand bargain” with Beijing — where the US pressures Taiwan into concessions
The term “assassin’s mace” originates from Chinese folklore, describing a concealed weapon used by a weaker hero to defeat a stronger adversary with an unexpected strike. In more general military parlance, the concept refers to an asymmetric capability that targets a critical vulnerability of an adversary. China has found its modern equivalent of the assassin’s mace with its high-altitude electromagnetic pulse (HEMP) weapons, which are nuclear warheads detonated at a high altitude, emitting intense electromagnetic radiation capable of disabling and destroying electronics. An assassin’s mace weapon possesses two essential characteristics: strategic surprise and the ability to neutralize a core dependency.
Chinese President and Chinese Communist Party (CCP) Chairman Xi Jinping (習近平) said in a politburo speech late last month that his party must protect the “bottom line” to prevent systemic threats. The tone of his address was grave, revealing deep anxieties about China’s current state of affairs. Essentially, what he worries most about is systemic threats to China’s normal development as a country. The US-China trade war has turned white hot: China’s export orders have plummeted, Chinese firms and enterprises are shutting up shop, and local debt risks are mounting daily, causing China’s economy to flag externally and hemorrhage internally. China’s
RSS