The global economy is stumbling, the future recovery is in sight

2013 is still an eventful autumn, and the global economic recovery is faltering. This time, the economic weakness and financial turmoil in emerging markets have diminished the joy of the developed countries towards a simultaneous recovery. According to preliminary estimates, the global output growth rate is only 2.4%, down from 2.6% in the previous year.

The withdrawal of the Federal Reserve QE is expected to trigger turmoil in emerging markets. Despite the government's suspension, the US economy continued to grow and the unemployment rate declined, driven by factors such as manufacturing revitalization, real estate recovery and shale gas revolution. The Fed began to withdraw its monetary policy of quantitative easing from May. The month officially announced a small reduction in the size of debt purchases. The impact of this policy on emerging markets is unusual. Large-scale outflows of capital from Southeast Asia, Eastern Europe and South America, currency depreciation and slow growth. Of course, QE exit is only an external fuse. The fundamental reason for the financial turmoil in emerging markets is that excessive capital inflows in the early stage pushed up the credit bubble, the structural reform process was slow, and new growth momentum was insufficient.

The European economy has emerged from recession. In contrast, the situation in Europe has improved a lot. Countries have promoted the process of fiscal integration, established the European Banking Union, the European Central Bank cut interest rates and adhered to direct currency trading plans. These measures have effectively improved investor confidence, capital re-inflows, heavy debt countries or recession slowdown, or the recovery process. The Eurozone economy has ended its recession and has gradually turned to a moderate recovery. The UK economy is also affected by factors such as policy stimulus, external demand and capital inflows. The recovery is strong. Overall, Europe’s contribution to global economic growth has turned from negative to positive.

The Japanese economy continues to recover. The Abe government’s sudden “three arrows” trick, namely, the bold financial policy dominated by the yen’s depreciation, the radical fiscal policy of expanding public spending, and the economic growth strategy centered on revitalizing private investment, seek to free Japan from economic downturns and currency. The dilemma of austerity. The first two "arrows" caused the yen to depreciate sharply and the stock market soared, which produced a certain stimulating effect and pushed the Japanese economy to recover beyond expectations. However, if there is no concrete structural reform measures in the future, Japan’s economic recovery will be unsustainable.

Regional cooperation presents a new situation. The World Trade Organization (WTO) Doha Round Negotiations took a historic breakthrough in 12 years. The 160 member states reached the first WTO global trade agreement in Bali, Indonesia, and the global trade volume is expected to increase by 1 trillion US dollars. Earlier, the Doha round of negotiations was stagnant, and regional economic and financial cooperation became a hot spot. The United States is pushing for the Trans-Pacific Strategic Economic Partnership Agreement (TPP) and the Transatlantic Trade and Investment Partnership Agreement (TTIP) negotiations to try to reshape and lead the new global trade rules; Europe continues to promote and strengthen the process of economic integration. Trade cooperation and links between the United States and emerging markets; emerging economies are not far behind, regional cooperation is in the ascendant, and financial cooperation between BRICS countries is typical, and countries actively take measures to deal with the crisis.

International financial markets are divided in volatility. The international financial market volatility led by economic recovery, capital flows and stimulus policies remains the same, but the differentiation is becoming more and more significant. Key international currencies such as the US dollar and the euro have risen and fallen, capital markets in developed countries have hit new highs, and emerging markets have become more volatile and overall weak. The long-term government bond yields of developed countries such as the United States and Germany rebounded, and the yield of government bonds in the marginal countries of the euro zone continued to fall. The gold market shifted from “bull market” to “bear market”. The international gold price dropped from 1,700 US dollars per ounce at the beginning of the year to 1,250 US dollars per ounce at the end of the year, a drop of nearly 30%. The loss of investors was heavy; the market segmentation of the commodity market intensified, including silver throughout the year. The cumulative decline was 35.4%; corn, gold, nickel, and wheat all fell more than 20%; aluminum, platinum, copper, lead, and zinc fell more than 10%, and countries with energy and agricultural products as the leading industries were greatly affected. .

The global financial industry is developing steadily. In order to ensure the stable operation of the international financial industry, national regulatory agencies continue to promote policy coordination and adjust regulatory requirements, and accelerate the pace of regulatory reform and supervision. The Basel Committee relaxed the implementation requirements of the New Capital Accord III of the banking industry, and promoted the implementation of international standards in terms of liquidity regulation, capital supervision, and supervision of systematic and important financial institutions. European and American countries continue to increase the penalties for the interbank interest rate (Libor) market manipulation case, and the international banking industry has shown a steady development momentum.

China is moving towards a new phase of reform. 2013 is a crucial year for the Chinese economy to move towards a new round of reform and development. This year, the Third Plenary Session of the 18th CPC Central Committee blew the clarion call for reform. The new government is determined to innovate and build a new blueprint for reform.

In this year, under the guise of active fiscal policy and prudent monetary policy, the economic and social construction has been brightly highlighted, and the reform dividend has been continuously released. The Chinese economy has maintained steady and rapid growth, the structure tends to optimize, and the financial operation is healthy and stable. This year, with the official listing of the China (Shanghai) Pilot Free Trade Zone, China's opening up to the outside world has shown a new look, foreign trade and investment have continued to be active, and cross-border use of the renminbi has reached a new level. In general, despite the pressure of comprehensive reforms and adjustments to the role of the government, the external environment is turbulent, and the Chinese economy is still “better in scenery”.

The future recovery dawns. Looking forward to 2014, as the recovery sprouts more widely around the world, the global economy is expected to continue its slow recovery, as well as the uncertainty of big country monetary policy, trade and investment patterns and commodity prices. China will bathe in a new round of comprehensive and deepening reforms, maintain the continuity and stability of macroeconomic policies, and strive to stimulate market vitality and accelerate the transfer of style. Adjust the structure of fiscal expenditure, improve the efficiency of capital use; maintain a reasonable growth of social financing scale, optimize the financing structure, promote the reform of interest rate and exchange rate mechanism, enhance the efficiency of financial operation and serve the real economy; release effective demand, give full play to the basic role of consumption, and invest The key role and supporting role of exports. We firmly believe that the Chinese economy will continue to maintain a rapid pace of growth and make an important contribution to the global economic recovery. Under the trend of peace, stability and cooperation and development, the countries of the world will finally embark on a path of full recovery and usher in a brighter future.

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