The United States has become the latest country to declare an economic recession in 2020.
The US real gross domestic product (GDP) grew at an annual rate of 4% in the fourth quarter of 2020, but the economy shrank by 3.5% for the whole year, according to the first forecast released by the US Department of Commerce on the 28th. This is also the first time that the US economy has shrunk in the whole year since the international financial crisis in 2008, the worst performance since 1946.
Since the outbreak of COVID-19, the global economy has been seriously hit by many countries, including the world’s largest economy, the United States. However, in the midst of recession, one country still stands out, with its economic growth drawing a “V & R” curve and stubbornly rebounding against the trend.
Recession becomes the main theme of global economy
In addition to the United States, some of the world’s major economies have recently released their 2020 results.
Preliminary GDP statistics released by the German Federal Bureau of statistics on January 14 show that Germany’s GDP in 2020 fell by 5% year-on-year. This is the first recession in Germany since 2010. German Federal Bureau of statistics pointed out that this data shows that the German economy has experienced a decade of growth after a deep recession.
According to the data released by China’s National Bureau of statistics on January 18, preliminary accounting shows that China’s GDP will reach a new level of one million billion yuan in 2020, an increase of 2.3% over 2019 at constant prices. From a quarterly perspective, the first quarter saw a year-on-year decrease of 6.8%, a growth of 3.2% in the second quarter, a growth of 4.9% in the third quarter, and a growth of 6.5% in the fourth quarter. It showed a quarter by quarter rise and a steady recovery.
According to the report released by the Bank of Korea on January 26 by the Central Bank of Korea, after preliminary accounting, the GDP growth rate of South Korea in 2020 will be – 1%, and the annual economic growth will be negative for the first time since 1998. The South Korean government said frankly that due to the outbreak of the third wave of pandemic at the end of last year in South Korea, which greatly weakened the household consumption power, it is difficult for the economic recovery to rebound strongly.
There are still some countries that have not released official data yet, but have made predictions on their economic growth in 2020.
The Bank of Japan released its economic outlook report on January 21, which slightly lowered its economic growth forecast for fiscal year 2020 (up to March 2021), and predicted that Japan’s real GDP would shrink by 5.6%.
India’s GDP is expected to shrink by 7.5% in fiscal year 2020 (April 2020 to March 2021), according to the Central Bank of India.
According to the financial sustainability report released by the office for budget responsibility (OBR), Britain’s GDP is expected to shrink by 11.3% in 2020. This is the biggest economic decline in the UK in 300 years.
The Bank of Canada believes that the country’s economy will have a strong recovery momentum before the end of 2020, but the epidemic situation and the re implementation of the blockade measures have frustrated the economy. It is predicted that Canada’s real GDP will drop by 5.5% in 2020.
Russian President Putin has revealed at the annual press conference that Russia’s GDP is expected to decline by 3.6% in 2020, but the Russian economic situation is still better than the average level in Europe and the United States in 2020.
At the global level, the International Monetary Fund (IMF) believes that the global economy may shrink by 3.5% in 2020 due to the better than expected growth momentum of the global economy in the second half of 2020, narrowing by 0.9 percentage points compared with the previous forecast.
Overall, recession has become the main theme of the global economy in 2020, and China will probably become the only major economy to achieve positive economic growth last year.
This year’s recovery prospects are cautiously optimistic
Now that 2020 is over and looking to the future, can countries forget the recession and realize economic restart?
The IMF gave a more optimistic answer. According to the updated world economic outlook report released by the organization on January 26, the global economy is expected to grow by 5.5% in 2021, 0.3 percentage point higher than the forecast in October last year.
But the IMF also has a way out for that optimism. According to the report, there is still “extraordinary” uncertainty about the prospects for global economic recovery. If the vaccine is further promoted and there is more effective policy support, the global economic activity will be further boosted. However, if the vaccine promotion is slow, the new coronavirus mutation or early withdrawal of policy support, the prospects for global economic recovery will deteriorate.
&”Although some areas of the global economy are showing signs of improvement, the impact of the epidemic on the economy continues, and a short-term recovery does not represent a substantial recovery. &”The Bank of China Research Institute has poured cold water on this year’s global economic outlook.
BOC believes that the current global economic growth momentum is insufficient. On the one hand, due to the decrease of working hours and the increase of unemployment caused by the epidemic, the income of residents has dropped sharply, and the global poverty situation has worsened. On the other hand, even if the economy has restarted, residents will tend to increase savings out of fear of future downside risks, and enterprises will not be willing to expand production, resulting in weak recovery of domestic demand.
What’s more, the epidemic situation has not been leveled yet, and the economic recovery of all countries is far away. The epidemic situation has repeatedly delayed the pace of recovery, or made the global economy slow down again in the fourth quarter of 2020 and the first quarter of 2021.
In this context, many people regard vaccines as the hope of economic recovery. Bank of communications Financial Research Center pointed out that the new vaccine is the key to restart the global economy. However, since mass production and vaccination are carried out in gradient, the pace of economic restoration will be significantly different in different countries. Developed countries are the first to enter the process of mass production, circulation and vaccination of vaccines. When the epidemic situation is effectively controlled, they will take the lead in the recovery.
However, developed countries with advantages in vaccination should not be too happy too soon.
Shen Minggao, chief economist of Guangfa Securities, reminded that even according to the optimistic forecast, the overall GDP level of developed economies is still difficult to return to the pre epidemic level this year. According to the forecasts of the International Monetary Fund and OECD, the GDP growth rate of the euro zone, the United States and Japan in 2021 can not cover the decline of the GDP growth rate in 2020. In other words, by the end of this year, the GDP level of developed economies may not be as high as that of 2019. Relatively speaking, emerging markets are still the highlight of growth, including China.
China remains the engine of global recovery
The global economic recovery in 2021 is in urgent need of strong momentum, which may have to be found in China.
In 2020, China’s GDP will reach 101.6 trillion yuan, equivalent to about 14.7 trillion US dollars according to the current average annual exchange rate, ranking second in the world, accounting for about 17% of the world economy. In 2020, China’s per capita GDP will exceed US $10000 for two consecutive years, ranking among the upper middle income countries, and the development gap with high-income countries will continue to narrow.
Despite the severe impact of the epidemic, powerful prevention and control measures, precise macro-control, and the confidence accumulated over the years have enabled China’s economy to rebound against the trend and achieve steady recovery.
Shen Jianguang, chief economist of Jingdong science and technology and President of the Research Institute, said that in the past few years, China has withstood the “stress test” of drastic changes in the international environment;. Even in 2018 and 2019, when the Sino US trade war is fierce and global cross-border investment is sluggish, China still holds high the banner of globalization and maintains an open attitude. The actual utilization of foreign capital has increased by 3% and 2.4% respectively against the trend, which is very commendable.
Shen Jianguang believes that under the COVID-19 in 2020, China has taken the lead in achieving economic recovery with more effective epidemic prevention and control measures, and quickly filled the gap between supply and demand caused by the global epidemic, and has become the last supplier of global commodities. At the same time, with the signing of RCEP and the completion of Sino EU investment agreement negotiations, China has taken the lead in the “re globalization” after anti globalization. A series of actions will not only help China consolidate its multilateral cooperation network, but also in turn promote reforms in domestic market access, financial governance and other fields.
Petya & middot; Kova & middot; Brooks, deputy director of IMF research department, also said in an interview that China has been one of the engines of global economic growth for a long time and plays an important role in the current process of global economic recovery. The Group believes that the policies issued by the Chinese government have effectively supported the economic recovery. In the future, China’s private sector economic activity is expected to gradually accelerate recovery. (Wang Enbo)