The international monetary fund (IMF) released its latest "world economic outlook" on Thursday, the theme of which is "global manufacturing downturn and rising trade barriers", highlighting the reasons why the global economy is in a synchronized slowdown. The growth rate of the world economy in 2019 will be lowered to 3%, which is the lowest level since the 2008-2009 global economic crisis. It is also a serious setback from the 3.8% growth rate in the synchronized global recovery period in 2017.

A synchronised slowdown in the global economy is hard to predict

The IMF has cut its growth forecast for 2019 for almost all of the world's major economies. Compared with its previous report in July, the IMF lowered its growth forecast for the United States by 0.2 percentage points to 2.4 percent, the euro zone by 0.1 percentage points to 1.2 percent, the United Kingdom by 0.1 percentage points to 1.2 percent, and Japan by 0.9 percent. At the same time, the IMF lowered China's growth rate by 0.1 percentage points to 6.1%, and India's growth rate by 0.9 percentage points to 6.1%. The growth rates of emerging markets and developing economies in southeast Asia, Latin America and the Middle East were also lowered to varying degrees. The IMF attributed the sluggish global growth to rising trade barriers, a decline in investment and demand for capital goods due to rising trade and geopolitical uncertainty, and a contraction and decline in manufacturing sectors, such as automobiles, that faced special shocks. More importantly, the growth performance in 2019 has been achieved by a combination of loose global monetary policy and proactive fiscal policies in China and the us, and the services sector has acted as a stabiliser in terms of consumption and employment.


Although the IMF also lowered its global economic growth forecast by 0.1 percentage points in 2020, the 3.4% growth forecast is still higher than the 3% in 2019, indicating its confidence in the global economic correction in 2020. The IMF is expected in 2020 will remain 1.7% growth for the developed economies, but the growth of emerging markets and developing economies are expected to back up to 4.6% from 3.9% in 2019, and think back about half of the reason lies in Turkey, Argentina and pressure on countries such as Iran's recovery or recession, the rest of the reason lies in Brazil, Mexico, India, Russia and Saudi Arabia and other recovery growth slowed sharply in 2019 countries. In fact, however, there is uncertainty about whether the global economy will pull back in 2020. First, the IMF expects the growth rate of the three major economies of the United States, China and Japan in 2020 to be 0.3, 0.3 and 0.4 percentage points lower than that in 2019, respectively. This may lead to insufficient global market demand and capital supply, and other emerging markets and developing economies that are highly dependent on global market demand and investment will lack basic conditions for a correction. Second, Turkey, Iran and Saudi Arabia and other countries are in the heart of the Middle East geopolitical conflict, the Iranian nuclear issue, Turkey and Syria's Kurdish armed conflict in regional tensions caused by problems such as difficult to 1 years to get proper solution in the future, even may appear new spoiler "black swan" events, makes the recovery of these countries is full of great uncertainty. In addition, with the universal implementation of global loose monetary policies in 2019, the operating space of monetary policies in many countries in 2020 is getting smaller and smaller, and fiscal and monetary policies are facing increasing risks of financial fragility, which further increases the difficulty of stimulating economic correction in 2020.

Structural problems are at the root of China's economic resilience

The IMF report focused on the growing global trade dispute as the most important cause of the global economic slowdown and called for decisive policies to ease trade tensions, reinvigorate multilateral cooperation and provide timely support for economic activity. However, escalating global trade disputes may be only the superficial cause of the global economic slowdown, and a series of structural problems resulting from trade frictions are the fundamental challenges.

Since the global economic crisis in 2008, the economic growth of developed and developing countries has diverged significantly, and the overall scale of economy and trade has gradually approached structural balance. On the one hand, it shook the dominant position of developed countries in the formulation of global economic and trade rules and triggered their antagonistic mentality. On the other hand, it has strengthened the negotiating basis and capacity of developing countries, giving them more confidence and desire to truly participate in the formulation of global economic and trade rules. Over the years, the two sides have discussed new and old issues such as special and differential treatment for developing countries, behavior of non-market economic entities, intellectual property rights, digital trade, agricultural subsidies and so on, but the doha round has produced little substantive agreement. Instead, the United States has resorted to unilateral measures, using tariffs as a means to pressure trading partners at the regional and bilateral levels to accept the new U.S. trade rules, and to intimidate others into wanting to regain the power to make multilateral trade rules. But the us move was strongly opposed by China, the eu, India and others. Therefore, the crisis of multilateralism caused by structural changes in the world economic pattern is the root cause of current global trade disputes, and it is difficult to restart the process of global trade liberalization in the short term.

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Developed economies such as the us and Europe also face serious domestic structural problems of their own, which make them gradually embark on the road of trade protectionism while their economic growth is weak. Developed countries, as active promoters of economic globalization, benefit a lot from it. However, due to the problems in the distribution of domestic income, the benefits brought by globalization to developed countries are highly concentrated in the elite class at the top of the wealth pyramid, while the large number of ordinary people at the middle and lower levels of society are in a declining relative economic status, thus becoming the losers of economic globalization. With the help of some politicians and media, the middle and lower classes in western countries blame their frustration on globalization and the development of emerging developing countries such as China, which has become the main force of anti-globalization at present. Populism is rampant. The United States and other western developed countries take trade protectionism as a panacea to solve the problem, in order to cater to the populist. The trade disputes initiated by the United States against China and the European Union have caused great damage and risks to the global value chain and the operation of international trade, reduced the investment and consumer demand of various countries in manufacturing, and become the biggest obstacle to the recovery of global economic growth. The slowdown of us economic growth in 2019, the upside down of interest rate on long-term and short-term Treasury bonds and the turn of monetary policy into a cycle of interest rate cut all indicate that the us economy in 2020 is full of uncertainty. In particular, with America's economic expansion already at its longest on record, the cyclical curse of a new recession is likely to return soon. The issue of brexit also started from similar reasons. The lower-middle class British people who failed to share the benefits of integration put the UK on a path of brexit that is still pending for more than three years through a referendum, which caused great uncertainty to the trade and investment between Britain and Europe and hindered the economic growth of Britain and Europe.

In addition to structural differences in class, there are also structural differences among developed economies. The IMF report notes that regional disparities within advanced economies have increased since the late 1980s, reflecting the relative stagnation of some regions that benefit from economic concentration. Backward regions have lower labor productivity, a higher share of employment in industry and agriculture, and the negative impact of adverse shocks on the economy lasts longer and adjusts more slowly. The targeted policies adopted by the United States and other developed countries for the backward areas still need long-term fine calibration to play an effective role in promoting.

China's economic growth slowed to 6.0% in the third quarter of 2019, attracting widespread attention at home and abroad. However, it must be recognized that this growth rate has been achieved in a complex situation faced with many risks and challenges at home and abroad, and is still the highest among the major economies in the world. It fully demonstrates the resilience and resilience of the Chinese economy, and China still has sufficient policy and market space to keep the economy running smoothly. Although the Chinese economy is faced with the challenge of a series of structural adjustment, but we are according to the demands of the development of high quality, to gradually achieve economic growth from the factors of quantity expansion drive innovation driven development of transformation, from is driven by investment and foreign trade to rely more on domestic consumption transformation, from low-end to high-end upgrade transformation in value chain. We need to ensure financial stability while maintaining economic growth and job stability. China's structural problems may affect short-term growth, but their resolution will benefit long-term economic quality. China will further open up in depth and breadth to provide impetus for the recovery and growth of the global economy.