The global economy is a complex system, which is influenced by many factors, such as politics, society, environment, technology, culture, etc. In this system, there are countries and regions whose economies are doing well and others that are struggling.
So, what is the general state of the global economy? The United Nations Conference on Trade and Development (UNCTAD) recently released a report with forecasts and analysis of the global economy in 2023.
According to the report, due to multiple factors such as the new crown epidemic, climate change and trade tensions, the global economic growth rate this year will be only 2.4%, lower than the 2.8% in 2019 before the epidemic.
This means that the global economy is still in a downturn, and it has not completely escaped the shadow of the global economic recession during the pandemic. So why is the global economy in this situation? This article will explore this issue from the following three aspects.
First, the new crown epidemic has caused a huge impact on the global economy
The pandemic has been one of the factors that have had the biggest impact on the global economy since 2020. According to the World Health Organization (WHO), as of the official end of the epidemic, the cumulative number of confirmed cases worldwide has exceeded 250 million, and the number of deaths has exceeded 5 million.
In order to prevent and control the epidemic, many countries and regions have adopted lockdowns, quarantines, travel restrictions and other measures, resulting in serious obstacles to the flow of people and materials, a decline in consumer demand and investment confidence, and a heavy hit to production activities and the service industry. Although governments have introduced various fiscal and monetary policies to stimulate economic recovery, the effect has not been obvious.
At the same time, due to the imbalance and inequity in the research and development, production, distribution and vaccination of vaccines, the epidemic has repeatedly fluctuated and erupted in some countries and regions, bringing more uncertainty and risks to the global economy.
Second, climate change poses enormous challenges to the global economy
Climate change is a long-term and urgent issue, and its impact on the global economy is becoming increasingly significant. According to the latest Sixth Assessment Report of the United Nations Intergovernmental Panel on Climate Change (IPCC), greenhouse gas emissions caused by human activities have already made the average surface temperature of the Earth about 1.1°C higher than in the pre-industrial period, and may reach 1.5°C or more by the end of the century.
This will lead to frequent and increased intensity of extreme weather events such as droughts, floods, hurricanes, fires, etc. These events will not only cause huge losses to human life and property, but also affect the normal operation of important industries such as agriculture, energy, transportation, and tourism, reducing the production efficiency and growth potential of the global economy.
At the same time, in order to cope with climate change, countries need to increase investment in emission reduction and adaptation, which will also put additional burdens and pressures on the global economy.
Third, trade tensions have caused huge obstacles to the global economy
Trade is an important part of the global economy, which can promote resource allocation, technological innovation, market expansion, consumption growth, etc. However, in recent years, due to the differences and contradictions between European and American countries and regions in terms of politics, economy and security, the global trade order has been undermined, trade protectionism and unilateralism have risen, and trade frictions and conflicts have occurred frequently.
For example, the trade war between the United States and China, the Brexit negotiations between the EU and the UK, and the steel and aluminum tariff dispute between the United States and the EU have all adversely affected global trade. According to the World Trade Organization (WTO), global trade in goods fell by 5.3 percent and services by 19.6 percent.
Although global trade picked up in 2023, it was still below expectations and faced multiple challenges such as the pandemic, supply chain disruptions, and tariff barriers. These challenges will not only affect the export earnings and import costs of countries and regions, but also affect the economic structure and competitiveness of countries and regions.
The uneven global economic recovery has brought two problems: on the one hand, insufficient demand. Global demand remains subdued as incomes and consumption in many countries and regions have been severely affected by the pandemic. According to the UNCTAD report, global consumption growth in 2023 was 3.8%, down from 4.2% in 2019; Global investment growth was 5.6%, down from 6.1% in 2019.
This means that the global economy has not completely emerged from the pre-pandemic problem of insufficient demand, but has further exacerbated it. On the other hand, the supply is insufficient. Global supply chains have experienced severe tensions and imbalances due to production disruptions, transportation delays, labor shortages and other factors caused by the pandemic.
According to UNCTAD's report, global trade grew by 9.5 percent in 2023, up from 0.5 percent in 2019, but was mainly due to price increases rather than volume increases. This means that the global economy has not fully recovered its pre-pandemic supply capacity, but is facing supply shortages and rising cost pressures.
Epilogue:
To sum up, we can see that the global economy is still in a state of malaise in 2023, mainly affected by three major factors such as the new crown epidemic, climate change, and trade tensions. These factors interact and reinforce each other, bringing unprecedented difficulties and crises to the global economy.
What do we need to do in the face of such a situation? On the one hand, it is necessary to strengthen international cooperation to jointly address global challenges; Accelerate transformation and upgrading and promote green and low-carbon development; On the other hand, it is necessary to safeguard multilateralism and promote free and fair trade. Only in this way can we achieve sustainable growth and shared prosperity in the global economy.