Though the global econ­omy sur­vived the fi­nan­cial tur­moil of 2008, gov­ern­ments need to do more to come out of the woods

Beijing Review - - COVER STORY - By Xu Feib­iao

The au­thor is an as­so­ciate re­searcher with the China In­sti­tutes of Con­tem­po­rary In­ter­na­tional Re­la­tions

hough a decade has passed since the 2008 global fi­nan­cial cri­sis, the world has not fully emerged from its shadow. In­stead of aid­ing the weak econ­omy to re­cover, the poli­cies adopted by West­ern coun­tries have cre­ated new hid­den per­ils and sowed the seeds for an­other fi­nan­cial cri­sis.

Worse still, the domino ef­fect of the 2008 global cri­sis is still alive and is af­fect­ing emerg­ing mar­kets and de­vel­op­ing economies, re­sult­ing in a pro­tracted down­turn in the world econ­omy. The econ­omy shortly re­bounded in 2009, then en­tered a pe­riod of slow growth dubbed a “new medi­ocre” by In­ter­na­tional Mone­tary Fund (IMF) chief Chris­tine La­garde, with the growth rate stuck at 3.5 per­cent.

In 2017, it re­bounded from re­ces­sion again, with an ac­tual growth of 3.76 per­cent. The IMF ex­pects global growth to tick up to 3.9 per­cent this year and next. But de­spite the up­swing, the fa­vor­able con­di­tions will not last for long, and the growth would in­evitably bend to­ward a weaker longer-term level. In fact, the growth in re­cent years ben­e­fited mainly from stim­u­lus poli­cies; the cor­ner­stone of eco­nomic en­doge­nous growth is still frag­ile.

Lurk­ing threats

The 2008 fi­nan­cial cri­sis be­gan in the United States. The sub­prime mort­gage cri­sis (2007-09) which orig­i­nated on Wall Street swept the world and de­vel­oped into a full-blown in­ter­na­tional bank­ing cri­sis with the col­lapse of many fi­nan­cial giants such as Lehman Broth­ers, one of the largest in­vest­ment banks in the United States.

Then came the Eu­ro­pean debt cri­sis cli­max in 2010. It was not un­til Au­gust this year that the EU an­nounced the con­clu­sion

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