World Economy on An Upward Trajectory?

After years of languid growth, the global economy shows moderate recovery By Chen Fengying

The world economy has been recovering since the first half of 2017, and has exhibited moderate growth after six years of slowing down. It is the first globally synchronized recovery for all areas and every major economy since the 2008 financial crisis. However, the global economic environment is still highly uncertain due to the influence of Brexit negotiation, the Trump administration’s unpredictable policies and the U.S. Federal Reserve’s cycle of interest rate hikes. The surge in protectionism and global debt also casts shadows on the development of the world economy. In the future, structural adjustment, innovative growth and inclusive development are crucial to resumption of healthy development and sustained economic growth. Both advanced and emerging economies are picking up steam and show signs of cyclical expansion from the last half of 2016 to the first half of this year. Recently, international organizations upgraded their growth projections for the world economy in 2017 and 2018. According to forecasts by the International Monetary Fund (IMF), the world economy will grow 3.5 percent this year and 3.6 percent in the coming year, much higher than the average rate in recent years. What’s more remarkable is that this is the first instance of recovery throughout all areas in years.

The IMF also predicts that nations and regions covered by the Group of 20 (G20) will observe decent economic growth, which is of vital importance to trade and investment stability. The G20 economies account for 85 percent of global GDP and contribute 80 percent to the increase in world trade. China is conducting supply-side structural reform through technological innovation, industrial upgrading, economic transitioning and infrastructure construction under the Belt and Road Initiative. The U.S. Government issued a series of policies including tax cuts, infrastructure plans, deregulation and energy independence to achieve manufacturing renaissance. Every country is speeding up to adjust their economic structure and innovate. In this context trade and investment in the global economy have increased.