May 2 2021 Recently, some of the world’s major economies have announced the first quarter of the economic report card. Some have continued to recover, some have emerged from recession, and others continue to struggle. Overall, the global economy is recovering, but not “walking in step”.
As the world’s top two economies, the United States and China have a significant impact on the global economy.
China’s gross domestic product grew 18.3 per cent year-on-year in the first quarter, according to data released on April 16th by the National Bureau of Statistics. On the one hand, China’s GDP grew by double digits year-on-year in the first quarter, influenced by incomparable factors such as the lower base of the previous year and the increase in the number of working days for the Chinese New Year, and on the other hand, the first quarter grew by 0.6% quarter-on-quarter and an average growth rate of 5.0% over two years, indicating a steady recovery in China’s economy.
On April 29th the Commerce Department released its first estimate, which said real GDP grew at an annualised rate of 6.4% in the first quarter. The figure was lower than market expectations, but the recovery has been fairly strong compared with last year’s negative growth for the whole of last year.
It is important to note that the official US GDP growth rate is calculated at an annualised rate, rather than the year-on-year rate that China is used to using. Tan Zhuo, director of china Merchants Bank’s Macroeconomic Research Institute, pointed out that U.S. GDP grew 0.4 percent in the first quarter of this year, a sharp difference from China’s 18.3 percent growth rate.
Overall, the U.S. economy recovered to pre-pandemic levels in the first quarter, Tan said. With vaccination rates rising and the weather picking up, the service sector is expected to accelerate repairs, and the current high savings rate will gradually release, supporting demand.
However, the downside risks to the US economy have not completely disappeared. On the one hand, the U.S. job market is suffering structural damage and the social divide between rich and poor is widening, and on the other, U.S. inflation expectations are likely to be underestimated and rise faster in the future, according to the Bank of China Research Institute.
China and the United States led the recovery, but on a global scale, the performance of each family has been mixed.
Eurostat data released on April 30th showed that the euro zone’s GDP fell 0.6% month-on-month in the first quarter of this year, down 1.8% year-on-year, suggesting that the economy is still not out of the doldle. Compared with the same period last year, the best economic recovery was in France (up 1.5 per cent) and Lithuania (up 1.0 per cent), while the rest fell year-on-year. Germany, in particular, underperformed, with GDP falling 1.7% month-on-month and 3% year-on-year in the first quarter.
In Asia, South Korea’s GDP grew 1.6% month-on-month in the first quarter, with the exception of China, which continued its strong showing. South Korea’s central bank had forecast that real growth would exceed expectations, such as a 1.3 per cent quarter-on-quarter growth rate in the first quarter, or a return to pre-pandemic levels.
Japanese officials have yet to release first-quarter economic data, but the outlook is bleak as the recent escalation of the domestic outbreak has escalated. Some analysts believe that because the Japanese government imposed a third round of state of emergency, the country’s economy in the second quarter of this year is likely to contract in the first quarter of this year, another negative growth, GDP fell by 600 billion yen (about $5.6 billion) a month.
In addition, Russia’s Ministry of Economic Development said the country’s GDP rose 0.5 percent in March from a year earlier after falling 2.5 percent in February, Tass reported. In the first quarter, Russia’s GDP fell 1.3% year-on-year, and the contraction slowed.
Why are the parties’ recovery progressing differently? According to an analysis by the Bank of China Research Institute, there are three sets of imbalances and mismatches in the structure of the global economic recovery: first, the recovery at the global production level is faster than the consumption level.
The reason for this is that there are new factors such as differences in the effectiveness of the pandemic and the widening gap between rich and poor caused by macro-stimulus policies, as well as the long-standing problems of industrial structure evolution, increased industry concentration and aging of the population.
In a fragmented recovery process, the world economy needs to find more momentum for balanced and sustainable growth, which may be present in Asia.
In the face of the outbreak, Asian countries have made great efforts to strengthen health systems, stabilize global supply chains, and lead the recovery of trade and investment. According to the flagship report of the Boao Forum for Asia’s 2021 annual meeting, Asia will see resilient growth this year, with growth expected to reach more than 6.5 per cent, and Asia will be an important engine for a sustainable global recovery.
In Asia, China is undoubtedly the backbone. The International Monetary Fund recently raised its growth forecast for China by 0.3 percentage points to 8.4 percent in 2021.
An Renli, chief China economist at Swiss Re, said the current massive global stimulus and the widespread use of Coronavirus vaccine were driving a strong recovery in the global economy, but the long-term outlook was uncertain. China’s economy will continue to be an important engine of global economic recovery, and the Chinese government will benefit the world from a long-term perspective by optimizing the structure of economic development and promoting sustainable economic development. (Complete)
