Is the global economy flying into a perfect storm, with Europe, China, and the US all entering downturns at the same time later this year? The risks of a global recession trifecta are rising by the day. A recession in Europe is almost inevitable if the war in Ukraine escalates, and Germany, which has been fiercely resisting calls to pull the plug on Russian oil and gas, finally relents. China is finding it increasingly difficult to sustain positive growth in the face of draconian Covid-19 lockdowns, which have already brought…
Tag: Economics
The world’s engines are spluttering: IMF points to deeper problems beyond 2022
The International Monetary Fund’s revised World Economic Outlook is sobering. It is rare for the organisation to revise down sharply its projections for economic growth only one quarter into the calendar year. Yet in this case, it has done so for 86% of its 190 member countries, resulting in a decline of almost one percentage point in global growth for 2022 – from 4.4% to 3.6%. Moreover, this forecast is accompanied by a significant increase in projected inflation, and all this bad news is packaged in a wrapping of deeper…
Ukraine war to slow growth and drive up poverty in Asia, World Bank warns
Russia’s invasion of Ukraine has further dampened the economic prospects for developing countries in east Asia and the Pacific, meaning lower economic growth and higher poverty in the region this year, the World Bank has warned. The Ukraine factor came on top of the existing risks that the region – home to 2.1 billion people and stretching from China to Papua New Guinea – has been facing in recent years. They included the ongoing Covid-19 pandemic, the financial tightening in the US, and the pandemic resurgence amid China’s zero-Covid policies.…
Only 6% of G20 pandemic recovery spending ‘green’, analysis finds
Only about 6% of pandemic recovery spending has been “green”, an analysis of the $14tn that G20 countries have poured into economic stimulus. Additionally, about 3% of the record amounts governments around the world have spent to rescue the global economy from the Covid-19 pandemic has been spent on activities that will increase carbon emissions, such as subsidies to coal, and will do little to reduce greenhouse gases or shift the world to a low-carbon footing. The analysis of the G20 fiscal stimulus spending, published on Wednesday in the journal…
Could Putin be exploring cryptocurrencies to bypass western sanctions?
As many people do when discussing the complex world of cryptocurrencies, Vladimir Putin kept it simple: “Of course, we also have certain competitive advantages here, especially in the so-called mining.” After events this weekend, when Russia was hit by severe financial sanctions, the Russian president might be considering capitalising on those advantages. Putin was speaking in January, days after the country’s central bank proposed a blanket ban on cryptocurrency trading and mining. In the case of bitcoin, the cornerstone cryptocurrency, mining is the energy-intensive process by which computers verify new…
‘No light at the end of the tunnel’: Americans join Hong Kong’s business exodus
In July 2018, Tara Joseph, president of the American Chamber of Commerce in Hong Kong, wrote an article in the best-known local English-language newspaper, the South China Morning Post, stressing to Americans the territory’s unique position as an Asian business hub. “The US is forgetting the differences between Hong Kong and China. Let’s remind them,” she wrote. “Hong Kong continues to have a robust and hearty infrastructure of values, practices and institutions that could not contrast more starkly with those of the mainland system.” Now, packing up and leaving the…
Rise in Covid cases slows manufacturing in China to weakest in two years
Output from China’s manufacturing sector slowed to its weakest in almost two years in January as the country’s tough anti-Covid measures forced factories into temporary shutdowns. A monthly snapshot of industry in the world’s second biggest economy showed production being hard hit by Beijing’s zero-tolerance approach to the pandemic. The Caixin/Markit purchasing managers’ index dropped from 50.9 in December to 49.1 in January – putting pressure on China’s policymakers to step up support for the flagging economy. A reading below 50 suggests output is contracting rather than expanding, with January’s…
IMF warns China over cost of Covid lockdowns
China, the world’s second largest economy, should review its zero-tolerance approach to the pandemic or risk damaging the global recovery, according to the head of International Monetary Fund. Kristalina Georgieva said Beijing should reassess the use of lockdowns to limit the spread of the highly contagious Omicron variant since it became clear the harm to human health was less severe than the Delta variant. Speaking at the World Economic Forum on a virtual panel, she said that while the hardline approach had contained the pandemic in China for “quite some…
Evergrande: ‘Everyone bet on inexorably rising Chinese property prices’
The crisis engulfing the Chinese property sector appears certain to intensify in 2022 as companies face debt repayments in the new year that are double those of the final months of 2021, risking what one China expert calls a systemic crisis for the world’s second-biggest economy. Although concerns about the stricken giant China Evergrande have receded in recent weeks behind a massive state-led restructuring operation, it missed a bond repayment of $255m (£190m) on Thursday and the debt problems that have pushed the second biggest developer in the country into…
From economic miracle to mirage – will China’s GDP ever overtake the US?
“The east is rising, the west is declining”, according to the narrative propagated by the Chinese Communist party (CCP). Many outside China take its “inevitable rise” as read. On the way to becoming a “modern socialist country” by 2035, and rich, powerful, and dominant by 2049, the centenary of the People’s Republic, China wants to claim bragging rights as its GDP surpasses the United States, and project its power based on its expanding economic heft. There is, however, a critical flaw in this narrative. China’s economy may fail to overtake…