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The global economic recovery process has encountered resistance

The global economic recovery process has encountered resistance

Zhou Wuying
November 26, 2018 08:26 Source: Economic Information

In 2017, the global economy experienced a simultaneous recovery, but the recent synchronous recovery process has begun to encounter resistance, especially in the major economies, the pace of recovery is mixed, and some are decelerating.

In the first quarter of this year, the OECD expects that strong growth in global trade will drive the economy to a seven-year high. However, after half a year, the OECD said that global economic growth has peaked, and in November it lowered its growth forecast for the global economy this year and next. Similarly, the International Monetary Fund in January this year believed that after 2018, the world economy began to enter a period of rapid growth, and the global economic growth forecast for this year and next year was raised to 3.9%. In October, the International Monetary Fund believes that the global economy is losing momentum, and in the face of increasing risks, the global economic growth forecast for this year and next will be lowered to 3.7%. In less than a year, international organizations have made important changes to the outlook for the global economy.

The main reason for exploring the transformation of economic expectations is that the overall escalation of international trade friction is the most important factor. According to the World Trade Organization, from mid-May to mid-October this year, G20 members adopted 40 new trade restrictions, involving a trade volume of about 481 billion US dollars, the highest level since the monitoring of the G20 trade began in 2012. Coupled with the impact of tightening monetary policy, the optimism about future economic growth expectations is reduced.

According to JPMorgan’s global manufacturing activity data, output growth in October has fallen to its lowest level in 28 months, while export orders have declined for the second consecutive month. According to data from market data provider IHS Markit, the Eurozone manufacturing PMI index has fallen to a 65-month low. However, due to the different resource endowments and different growth drivers of major economies, there has been a divergence in growth decline time and decline.

Driven by factors such as fiscal stimulus, strong business and consumer confidence, the US economy may continue to linger in the peak of the economic expansion cycle in the coming months. At present, the US initial Markit manufacturing PMI in November is 55.4, which is stable, and it is expected to maintain strong economic growth in the fourth quarter. However, with the deterioration of the fiscal stimulus effect and the tightening of the monetary policy environment, the US economic growth rate is expected to fall next year.

On November 14, the data of the Cabinet Office of Japan showed that the GDP in the third quarter fell by 1.2% on a year-on-year basis. After the economic decline of 0.6% in the first quarter, there was another negative growth. As a locomotive of the European economy, Germany also experienced economic fluctuations. In mid-November, data from the German Federal Statistical Office showed that the GDP in the third quarter fell by 0.2% due to factors such as foreign trade trends.

The future development situation in Europe and Japan is not optimistic. Throughout the first three quarters of this year, the Japanese economy has experienced negative growth for two quarters. The changing international situation has also affected corporate equipment investment, and the economic recovery plan may be disrupted. Due to the tight global trade situation, the German economic think tank lowered the contribution rate of exports to the economy by two percentage points to 1%. In addition to the possible impact of the UK’s “Brexit”, Germany’s economic growth expectations have been lowered, which in turn affects the euro. The overall performance of the district. In the third quarter, the annual growth rate of the euro zone economy was only 0.7%, which is the worst performance since the beginning of 2013. In the future, foreign trade may once again have a negative impact on the European economy. The EU expects the UK's economic growth rate this year to be only 1.3%, the lowest level since 2009. If the European Central Bank ends its quantitative easing policy by the end of 2018, the European economic outlook in 2019 is not very optimistic.

In emerging economies, although the overall level of economic growth will still be higher than that of developed economies, there are significant differences in the situation in different countries. The International Monetary Fund predicts that the Venezuelan economy, which is still in a state of crisis, will decline for five consecutive years and may have a negative growth of 18% this year; Turkey’s economic growth forecast for next year is only 0.4%.

At present, if the international trade friction can be eased, the global economy is expected to maintain a relatively strong growth momentum next year.