【Special attention】
Author: Wan Zhe (Special Researcher at the Beijing Research Center for Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, Researcher at the Belt and Road College of Beijing Normal University)
2023 will be an extraordinary year for the global economy. Although the COVID-19 pandemic is basically a thing of the past, the scarring effect it has left is still difficult to completely recede. Countries and regions that have “released large amounts of money” during the epidemic have actively or passively tightened financial conditions; the most radical interest rate hike in the history of the United States has cast a shadow on the global economy as the overall economic growth slows down, financial risks rise, and the exchange rate market becomes unstable. and other shadows; geopolitical conflicts will further occur when the social and economic situation is not stable. However, the global economy has also shown a certain degree of resilience in 2023, adding impetus to the global economy in 2024.
Global: Slow economic recovery
Although the global economy will be quite difficult in 2023, it has generally achieved several important goals, including economic growth and the fight against inflation. In terms of economic recovery, global GDP growth in 2023 is significantly higher than expected at the beginning of the year, and most countries and regions performed better than expected. Moreover, more robust GDP growth translates into a more robust labor market, and improvements in the labor market are evident even in some major economies such as the Eurozone where real GDP growth is very low.
As of December 24, 2023, as the “golden sign” of China-Indonesia cooperation in building the “Belt and Road”, the Jakarta-Bandung high-speed railway has transported more than 1 million passengers. The picture shows a running high-speed EMU of the Jakarta-Bandung High-Speed Railway photographed near Dekarur Station in Bandung, Indonesia on December 6, 2023.Xinhua News Agency
Looking ahead to 2024, this improvement may continue. Because, from 2023, the balance of supply and demand in the labor market continues to improve. While job vacancies are decreasing, the unemployment rate has not increased significantly. Job vacancy rates in most major economies remain elevated relative to levels suggested by economic fundamentals, with room for further normalization and adjustments to be benign and sustainable.
In view of this, inflation may also stabilize in 2024. Since the end of 2022, the continuous core inflation rate of all G10 economies except Japan has dropped from 6% to 3%. Central banks have completed most of the adjustments to control inflation. Nominal wage growth has begun to slow down significantly, coupled with the general anchoring Inflation expectations, the possibility of a comeback of inflation surge is low.
In an environment where inflation is lower and labor markets remain strong, disposable income in developed markets will grow significantly. But just like the differentiation between Europe and the United States in 2023, the differentiation in 2024 will still be obvious, but they will swap places. Real income growth of 4% is expected to slow in the United States in 2023, while there is more room for real income growth in the euro area and the United Kingdom to rise as the Russian gas supply shock recedes. In addition, as inflation calms down, monetary tightening policy will gradually be withdrawn. Although it will still have an impact on GDP growth in the first half of the year, the drag on the economy will be less than in 2023. If growth prospects are unfavorable, interest rate cuts may also become a policy option. Several countries in emerging markets that raised interest rates earlier have begun to lower policy rates and may continue to cut interest rates steadily.
Manufacturing activity is expected to recover from the 2023 downturn. In 2023, commodity exports from most exporting countries such as the United States, Japan, South Korea and Southeast Asia will shrink significantly. The World Bank predicts that global trade growth will be 1.7% in 2023, much lower than the 6% in 2022. In the second half of 2023, as the recession expectations between China and the United States subsided and the geopolitical situation eased, global trade began to slowly pick up, and the export growth rates of the United States, Japan, South Korea, India, and Vietnam all turned negative to positive. In 2024, global trade growth is expected to continue its moderate recovery trend.
United States: The shadow remains after recovery
In 2023, the U.S. economy seems to be showing a recovery beyond expectations. After several banking crises that shocked the market in the first half of the year, the “most aggressive interest rate hike in history” persisted because of the difficulty in eradicating high inflation, causing the U.S. dollar index to remain at a high level for a long time. , central banks around the world not only need to grit their teeth and insist on monetary tightening, but also face exchange rate pressures. However, another financial crisis and great recession that worried the world did not come. The U.S. economy seemed to have achieved a so-called “soft landing” in the second half of the year. The shadow of recession was gradually fading away, which made the world heave a sigh of relief. The reason is that the impact of the three-year COVID-19 epidemic has caused many distortions and dislocations in this economic cycle. It is different from previous cycle patterns. The sensitivity of the U.S. private sector to high interest rates has been significantly blunted, and the economic recovery and challenges have The signals are also out of sync. In the past, the synchronization between real estate and the economy and consumption was more obvious, but the post-epidemic economy shows that real estate may clear out of recession earlier. Although the first half of 2023 was affected by the Federal Reserve’s tightening policy, fiscal expansion bottomed out residents’ income, causing it to bottom out and rebound.
The inflation rate in the euro area fell to a new low in more than two years in November 2023. The picture shows a man going shopping in a supermarket in Brussels, Belgium, on November 30, 2023.Xinhua News Agency
Looking forward to 2024, the U.S. economy will continue to be resilient at the beginning of the year, but may come under pressure later, and interest rate cuts may become a “hot word.” Currently, the debt ratio of U.S. residents is at a historically low level, and their spending power still has some support. At present, the demand for labor in the United States is still strong, and the unemployment rate will not rise significantly, which will also provide certain support for consumption. The U.S. financial system has always been the “trigger” and “culprit” of crises and recessions, and has worried the market the most. However, this banking crisis is sporadic and has not “started a prairie fire”, demonstrating the Federal Reserve’s excess capacity after the 2008 crisis. The reserve system, the strengthening of financial supervision and the effectiveness of various financial rescue tools have improved the stability of the financial system.
But it may be too early to say that the shadow of the U.S. economy has dissipated. Judging from current data, although U.S. inflation will continue to ease in 2024 and rents, energy and other prices will fall, the lag in the impact of interest rate hikes may have an impact on the economy. Historically, the impact of the Federal Reserve’s interest rate hikes on the economy usually lags 1 to 2 years before they are fully apparent. The last interest rate hike in this round will be in July 2023, which means that it will take at least the first half of 2024 for the U.S. economy to fully reflect the interest rate hike. Impact. High debt levels, coupled with tightening financial conditions and financing environment, and slowing profits, will cause U.S. non-financial companies to face greater deleveraging pressure.
In 2023, the U.S. fiscal budget will obviously exert its strength, and the annual fiscal deficit will be second only to that during the epidemic. Federal fiscal revenue fell by 9% to US$4.4 trillion in fiscal year 2023, and fiscal support for GDP is expected to weaken in 2024. Due to the reduction and withdrawal of expenditures in the previous fiscal bill and the intensification of party disputes, the reduction of U.S. fiscal expenditures in 2024 is basically a foregone conclusion. Whether this will have an impact on U.S. “manufacturing reshoring”-related expenditures remains to be seen. As of September 2023, the savings of middle- and high-income people in the United States have been basically exhausted. Although their balance sheets are still relatively healthy, with a certain cooling of the labor market and falling inflation, it is difficult for residents’ real income growth to improve significantly, and private consumption momentum A weakening is inevitable. With inflation falling and unemployment rising, the Federal Reserve will shift to an interest rate cut policy in 2024, which may trigger a new round of inflation in the United States.
China: Anchor of stability in global economic storms
2023 is the first year for fully implementing the spirit of the 20th National Congress of the Communist Party of China. It is also the year for economic recovery and development after the transition of COVID-19 prevention and control. This year, China withstood external pressure, overcame internal difficulties, comprehensively deepened reform and opening up, intensified macroeconomic control, and focused on expanding domestic demand, optimizing structure, boosting confidence, and preventing and defusing risks. The national economy has rebounded for the better and high-quality development has been solid. Advance. The Organization for Economic Cooperation and Development has raised China’s economic growth forecast for 2023 to 5.2%, the International Monetary Fund has raised it to 5.4%, and many financial institutions such as JPMorgan Chase, Goldman Sachs, Citigroup, UBS, Deutsche Bank, and ANZ Bank have raised their forecasts. China’s economic growth forecast for 2023 has been raised to between 5% and 5.5%. This shows that China is still the main driving force for Asia-Pacific and global economic growth.
In 2023, China’s economy will undergo structural transformation and upgrading. From the perspective of consumption, among the troika, consumption performance is more eye-catching. Although it will take time to recover from the scarring effect after the epidemic, contact consumption and service consumption have recovered quickly, and new consumption and consumption upgrades such as digitalization, green, cultural tourism, and sports have maintained a good momentum. From the perspective of exports, the “three new items” represented by electric vehicles, solar cells, and lithium batteries are becoming new growth points for my country’s exports. The hot sales of the “Three New Products” are the result of my country’s technological innovation and industrial optimization and upgrading. As the only country in the world that has all industrial categories in the United Nations industrial classification, my country has complete industrial categories, complete industrial chains and supply chains, and the conditions required for the production of the “three new products” are fully met. As my country continues to play a leading role in innovation and promotes the deepening of green transformation, high-tech industries are injecting new momentum into China’s development. In terms of manufacturing, China’s manufacturing industry has strong recovery potential, and the inventory cycle is bottoming out and picking up. As of October 2023, the output gap has been off the bottom for 6 months, PPI has bottomed out for 4 months year-on-year, and industrial production has entered the “stock replenishment” stage. From the perspective of investment, the emerging service industry has developed and become a “new force” in addition to manufacturing, infrastructure and real estate. The proportion of high-tech services and social services in fixed asset investment is only slightly lower than that of real estate. The high-tech service industry has maintained an investment growth rate of over 10% for nine consecutive years, which is not only conducive to the optimization of the investment structure, but also conducive to the further transformation and upgrading of the manufacturing and service industries.
From the perspective of economic and trade relations, Sino-US relations are in a period of easing, while economic and trade relations between China and emerging market countries continue to strengthen. In the first eight months of 2023, exports to emerging and developing economies accounted for 44% of China’s total exports, up from 25% in 2007. In a chaotic global situation, this has further intensified the impact of China’s economic The breadth and resilience of collaboration. In terms of resolving risks, for local government debt, some provinces have issued nearly 1.5 trillion yuan in special refinancing bonds from October 2023 to the present. The funds raised are mainly used to repay the arrears of corporate accounts that local governments are responsible for repaying. . The issuance of special refinancing bonds means that the prevention and resolution of local government debt has entered a new stage.
Looking forward to 2024, well-known international financial institutions such as UBS Group and Goldman Sachs Group generally predict that emerging markets will usher in rapid growth again in 2024, and an important driving force for their accelerated recovery is the development of the Chinese economy.
In 2024, as the series of policy measures adopted by the Chinese government become effective and private sector investment grows, the macro economy is expected to further recover and stabilize. China’s economy will maintain mid- to long-term growth, and the government will intensify policies to stabilize growth to boost the economy. In 2024, the green economy, digital economy and smart economy will become the new “troika” driving the economy. The upward upgrade of consumption and the tapping of potential will be carried out simultaneously, which is expected to drive economic growth. Under the premise of a weakening US dollar and increased policies, China’s economic vitality will be better unleashed and economic growth will gradually return to normal.
On the international front, the San Francisco meeting between the heads of state of China and the United States in November 2023 will promote the relaxation of Sino-US relations and bring new opportunities for the adjustment of the global industrial and supply chain patterns. In 2024, the joint construction of the “Belt and Road” will enter a new golden decade. Investment in new fields such as green, digital, innovation, and health will become new growth points. A high-level three-dimensional interconnection network will bring economic and trade ties between my country and the co-building countries. With continued gains in the future, Southeast Asia, Central Asia and the Middle East are expected to continue to be the highlights of the Belt and Road Initiative.
In 2023, the global economy will be full of turmoil. In 2024, the global economy may become unstable, uncertain, and unpredictable. The political turmoil brought about by the general elections in many countries will definitely affect the global political and economic situation. In particular, the U.S. election has already started before the official start, which may disrupt the pace of global economic recovery. Europe faces regional conflicts and energy transition, and is faced with a dilemma. Inflation may go down, and interest rates may go down, but the outlook is highly uncertain. Facing the complex and ever-changing international situation, China will, as always, seize the strategic initiative, adhere to bottom-line thinking, respond calmly, run its own affairs well, and respond to the uncertainty of changes in the external environment with its own certainty.
“Guangming Daily” (January 2, 2024, page 16)
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责编：张璐琢 ]
2024-01-01 20:55:00
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