Looking forward to 2018： the global economy is welcoming ＂shifting speed＂
After a long recovery period since the international financial crisis in 2008, the global economy finally ushered in the largest range of growth acceleration in the past 10 years in 2017, which made people have more confidence when talking about the future of the global economy. With the coming of 2018, it has become a general consensus to be bullish on the global economy, and even some people think that the global economy is expected to enter a prosperous period in the new year.
Of course, in 2018, the global economy ushered in a year of continuing to overcome difficulties. Can the strong growth of global economy resist the "headwind" of trade protectionism? What new variables will the global economies face when the United States chooses the policy shift of "national priority"? What benefits will China’s economy, as the main engine, bring to the world? In 2018, opportunities and challenges coexist for the global economy.
The global economy has cut to a "fast growth block"
Protectionism "challenges" open cooperation
Compared with the caution and pessimism in the past few years, when looking forward to the global economic trend in 2018, many international institutions unanimously issued optimistic voices.
In the latest World Economic Outlook Report, the International Monetary Fund raised its global economic growth forecast by 0.1 percentage point to 3.7%. The World Bank predicts that the global economic growth rate will rise from 2.7% in 2017 to 2.9% in 2018. The report "World Economic Situation and Prospects in 2018" released by the United Nations recently also believes that the global economy will continue to grow in 2018.
"There are obvious signs of recovery in the global economy, and the basic cycle of economic growth has started. At present, the global economy is at the starting point of a new cycle. " Xu Hongcai, deputy chief economist of China International Economic Exchange Center, said in an interview with this reporter.
Confidence is largely due to the bright transcripts of the global economy exceeding expectations in 2017. Nearly 10 years after the international financial crisis in 2008, the global economy has finally changed from "slow crisis" to "fast growth". However, also in 2017, some problems emerged and became increasingly serious, which made people optimistic about the overall performance of the global economy in the new year while not being too optimistic.
A big worry is that in 2018, the global economy may not be able to avoid the head-on collision and contest between the two forces of open cooperation and protectionism.
Perhaps the biggest bad news for the global economy in 2017 is the fundamental "turn around" of the world’s largest economy. Since Trump, the new president, came to power, taking "American priority" as the basic position, the United States has successively "retired" from several multilateral mechanisms such as the Trans-Pacific Partnership Agreement and the Paris Climate Agreement, and tried to dominate the North American Free Trade Agreement and modify the rules of the World Trade Organization. The process of liberalization and globalization has encountered a strong "headwind".
"In 2018, protectionism will continue to be complicated. Facing emerging economies such as China ‘ Overtaking in corners ’ The western developed economies feel that the competitive pressure is obviously rising, and they may take frequent shots or even join hands. At the same time, the multilateral trading system of the World Trade Organization will be challenged. " Chen Fengying, a researcher at the Institute of World Economics of China Institute of Contemporary International Relations, said in an interview with this reporter.
Xu Hongcai also believes that with the economic recovery of major developed economies in 2018, trade protectionism may be further strengthened.
In this regard, the International Monetary Fund, the Bank for International Settlements and other organizations have warned that once the global protectionist sentiment is further intensified, it will make it more difficult to coordinate global policies, thus dragging down global productivity and economic growth.
However, the advancement of some regional free trade negotiations has convinced people that open cooperation is still the irreversible mainstream of the global economy. In November 2017, the first leaders’ meeting of Regional Comprehensive Economic Partnership Agreement (RCEP) was held in the Philippines, and the Framework of RCEP Agreement was determined, which set a clearer direction for the negotiations officially launched in November 2012. Earlier, Japan and the European Union, two developed economies, also formally signed a free trade agreement.
"In 2018, further deepening international cooperation will remain the overall trend." Xu Hongcai said.
Chen Fengying also believes that although the international trade situation may face severe challenges and the risk of trade friction will increase in the new year, the actual international trade volume will not be greatly affected. "It can be seen that the overall trade volume of prosecution in the WTO is still very small."
China’s "engine" is still stable
"American priority" brings variables
The World Economic Situation and Prospects in 2018 released by the United Nations shows that in 2017, one third of the global economic growth depends on China. As the main driving force of global economic growth, China’s economy has performed outstandingly in the past year, providing the world with full positive energy.
In 2018, for the global economy, China’s economy will remain the "ballast stone" to inject confidence and the "main engine" to provide power.
A few days ago, the World Bank, the International Monetary Fund, and the Organization for Economic Cooperation and Development raised their expectations for China’s economic growth in 2018. The latest research of many international organizations generally predicts that China’s economy will continue to maintain strong growth in 2018, and the continuous progress of economic stabilization and rebalancing will attract more overseas investors.
Some analysts believe that in 2018, China’s economy, which has entered a new era, is expected to achieve qualitative change in three dimensions, namely, the cycle evolution presents new resilience, the reform and opening up advances to a new depth, and global governance creates new opportunities.
"In 2018, China’s economy will operate within a reasonable range with little problem and full confidence. More attention will be paid to supply-side structural reform and quality improvement." Xu Hongcai believes that while maintaining steady growth, China’s economy will continue to exert its strength in the cultivation of kinetic energy and become a new bright spot. In addition, further deepening the reform and achieving remarkable results in the three major battles of preventing and resolving major risks, accurately getting rid of poverty and preventing and controlling pollution will also be an important point of view for China’s economy in 2018.
According to Obst Field, chief economist of the International Monetary Fund, "the good news of China will be good news for the whole world".
At the same time, as another important driving force of global economic growth, the United States may bring more variables to the world in the new year. In 2017, the US economy rebounded. In 2018, can this positive trend continue? The analysis believes that two factors will pose a challenge to the US economy, one is the uncertainty brought by the Trump administration’s economic policy, and the other is the potential policy risks that may be brought about by the gradual tightening of the Federal Reserve’s monetary policy.
At the end of 2017, the US Senate passed the largest tax reduction bill in 30 years, and the Federal Reserve also started to raise interest rates for the third time in the year. "The US tax reform will attract global capital to return to the United States and stimulate the US economy, so the US economy in 2018 will not be too bad compared with this year." Chen Fengying said.
Bank of America Merrill Lynch, the US investment bank, also predicted that the US economy will grow by 2.4% in 2018, higher than 2.2% in 2017. The tax reform plan will increase the US economic growth rate by 0.3 percentage points.
However, for the global economy, risks will follow. Bank of America Merrill Lynch believes that with the implementation of the US tax reform bill, the potential impact on US economic growth has begun to stand out. In the first quarter of 2018, the pace of the Fed’s interest rate hike may be further accelerated, and the US dollar index will fluctuate greatly, which means that emerging markets will face more uncertainties.
"There is no doubt that tax cuts and interest rate hikes in the United States will have an impact on global capital flows and industrial division of labor." Xu Hongcai said.
Chen Fengying believes that the economic policy shift of the Trump administration will further complicate the world economic relations in 2018.
At present, it seems that the only certainty that the United States will bring to the world in 2018 is that the Trump administration will make the United States more "self", and the global economy will face more uncertainty.
Developed economies continue to pick up.
Emerging economies accept challenges
For most western developed economies, 2017 is a relatively easy year.
In 2017, the recovery pattern of the United States "outshining others" turned to the growth of developed economies such as the United States, Europe and Britain. The euro zone has experienced the strongest expansion in the past 10 years, and European countries have gradually stepped out of the quagmire of the European debt crisis and ushered in long-lost common growth. Japan has gone further and further on the road of quantitative easing, and its economy has grown slightly. Reuters said that in 2017, the economic performance of the euro zone and Japan exceeded the forecast of the previous year.
"In 2018, the western economies as a whole will have a steady growth." Chen Fengying said.
HIS Markit, an international consulting firm, predicts that Europe will achieve an estimated economic growth of 2.2% in 2018. Thanks to export, domestic demand and infrastructure investment for the 2020 Tokyo Olympic Games, Japan’s economic growth rate in the new year will reach 1.2%.
While the developed economies continue to pick up, the economies of emerging economies will usher in a more challenging year.
Some analysts believe that in 2018, emerging economies may face three challenges. First, under the background of the emergence of anti-globalization wave and the more complicated international trade environment, the trade and investment environment in emerging markets is more severe, which has a negative constraint effect on their economic growth; Second, emerging market countries themselves may face the risk of the spread of populism and extremism, and their political stability will be affected; Third, geopolitical risks remain high.
Statistics also show that there will be nearly 20 elections in emerging market countries in 2018, including large emerging market countries such as South Africa and Indonesia. JPMorgan Chase analysts also pointed out that in 2018, Latin America will usher in the most intensive calendar of political events in more than 10 years. Political factors may become an inestimable risk in investment in emerging markets.
However, all parties are still generally optimistic about the vitality of emerging economies. The International Monetary Fund predicts that the economic growth rate of emerging economies and developing countries will further rise to 4.9% in 2018, reaching a five-year peak. Among them, the contribution of emerging economies to global economic growth is expected to reach 77%, up 2 percentage points from 2017.
Hong Kong’s "South China Morning Post" published an article saying that investors in emerging markets will continue to be shaken in 2018, but they will not be disturbed. The rising trend of developing economies still exists and will continue to perform well.
"With the recovery of commodity prices such as oil and natural gas, emerging economies such as Russia and Brazil have benefited a lot. In addition, ‘ Belt and Road ’ Construction will also provide more space for cooperation between emerging economies and developed economies. " Xu Hongcai said.
Chen Fengying also believes that, on the whole, emerging economies are still the main contributors to the global economy. "In 2018, this pattern will not change much."