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The US could help fuel a strong global economic recovery this year, as the country plays a more central role in recovery than it did after the previous financial crisis. This reflects the unusual nature of the Covid-19 shock and the flexibility of the US economy.

According to Oxford Economics, the world economy is likely to grow around 6% this year, the fastest pace in nearly half a century, as vaccination campaigns allow epidemic prevention restrictions to be lifted and joint sales. capital recovery business.

The United States, for the first time since 2005, is also expected to contribute more to global growth than China this year, according to the agency. Before that, after the 2008 financial crisis, the global economic recovery was aided by China again, as the US experienced its weakest recovery since the Great Depression.

Since the US economy is about a third larger than China, its contribution to global growth will be greater than that of China if both grow at approximately the same rate this year.

"America will play a leading global role again in 2021," said Catherine Mann, chief global economist at Citibank. She also said that the international situation will also hamper the economic growth of this country.

Contribution to global growth over the years by economies: China (red), America (green), Eurozone (yellow) and the rest of the world (gray). Graphics: WSJ.

According to Goldman Sachs, the US economy has slumped 3.5% in 2020 and is expected to grow around 7% in 2021. Meanwhile, China grew 2.3% last year and is expected to grow. up 8% this year.

JP Morgan economists predict that the US will surpass its pre-pandemic growth rate by the middle of this year, while China has returned to a pre-pandemic trajectory but will not exceed its previous growth rate. Europe and some emerging markets will still lag behind next year.

Joerg Kraemer, Chief Economist at Commerzbank, said that weak population and productivity growth could affect China's output in the coming years. Beijing policymakers have signaled that they plan to gradually withdraw stimulus measures this year, focusing on curbing debt and avoiding real estate bubbles.

Meanwhile, the US economic recovery is due to the country's rapid deployment of the Covid-19 vaccine, an expected spending package of $ 1,900 billion, very low interest rates from the Federal Reserve and savings. compressed. According to Oxford Economics, American households are saving a surplus of $ 1,800 billion.

Recessions in the US and many economies are also not characterized by bursts of asset bubbles or cumulative debt, unlike previous economic crises. Economists say that will accelerate the recovery.

Credit to businesses grew at an annual rate of 80% at the height of last year's pandemic in the US, Eurozone, Japan and UK. This figure is quite different from the 13% decline in bank credit during the financial crisis in 2009.

But a strong US recovery could challenge lagging regions like Europe and some emerging markets. Investors' improved confidence is pushing up the US and global borrowing costs, as well as the strengthening of the dollar. This is a headache for governments that have usury in USD.

European Central Bank officials have rang alarm bells about rising bond yields. They will gather on Wednesday and Thursday this week to consider whether or not to increase emergency measures, including a program of buying bonds worth 1,850 billion euros, or $ 2,200 billion.

Across Europe, Covid-19 vaccine deployment has been slow, and governments are not taking into account new spending the size of the United States, in part because of fears of rising debt. Retail sales in the eurozone also unexpectedly plunged more than 6% in January due to a number of countries having renewed blockade measures. Meanwhile, US retail sales increased 7.4% over the same period.

In Germany, more than 7% of the production staff worked in February, with production almost returning to previous levels. This suggests that some of the trained workers may be redundant in the future.

The Kion Group, a Frankfurt-based manufacturer of forklifts and warehouse equipment, has had the largest orders ever despite the pandemic, fueled by strong Internet shopping in China. North America and Europe.

"China is not only recovering from its old state, but also at a record level in industrial output. North America, thanks to money flowing into the system without being left behind. Europe is lagging behind," said the director. executive Kion Gordon Riske, says.

If the $ 1,900 billion stimulus package is approved by the US bicameral, Kion is likely to face capacity problems as US growth speeds faster, Riske said. Global investors have begun to worry about rising inflation, which could be a result of strong growth and supply chain bottlenecks.

 

 

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