Positive signals

Monday, 2021-04-19 17:51:33
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Employees work on a truck assembly line in a factory in Shandong province, China, March 15, 2021. (Photo: AFP)
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NDO – Despite the complicated COVID-19 epidemic, the global economic outlook is gradually brightening with a series of positive signals coming from major economies such as the US, China, the Republic of Korea (ROK) and Southeast Asia.

After a year of “bottoming out”, the largest economy in the world, the US, is witnessing signs of strong V-shaped recovery. The International Monetary Fund (IMF) and the World Bank (WB) recently stated there is a big difference between the economic prospects of the US and many other countries, thanks to the latest US$1.900 billion bailout package.

Accordingly, the IMF raised its forecast for US economic growth from 4.3% to 5.1% this year. The statistics also show the US economy has recovered strongly. In early April, the Institute of Supply Management (ISM) published a report showing US manufacturing in March grew spectacularly, reaching its highest level since December 1983. Accordingly, the Purchasing Managers’ Index (PMI) reached 64.7%, up 3.9% from the previous month.

Meanwhile, statistics also show that the second largest economy in the world, China, had record growth in the first quarter of 2021. Data from the National Bureau of Statistics released on April 16 showed that China’s economy grew 18.3% in the first quarter over the same period in 2020, its highest quarterly growth rate since 1992, mainly thanks to strong domestic and international demand. China’s gross domestic product (GDP) in the last quarter reached about US$3.82 trillion, an increase of 18.3% over the same period in 2020.

In other major Asian economies, although difficulties are still significant, positive signs of recovery have appeared. Data from the Korea Customs Service shows the ROK's export revenue in the first quarter reached US$ 146.5 billion, up 12.5% over the same period in 2020. Analysts said the sharp increase in the ROK’s export revenue was attributable to increased demand for items such as semiconductor-chips, mobile phones, computers and peripheral devices. Thanks to the export recovery mentioned above, the Korea Economic Research Institute has forecast that the growth of Asia's fourth-largest economy is likely to reach 3.5% this year, up sharply from a 1% decline of 2020.

The strong economic recovery signals have also appeared in most other ASEAN economies. The IMF has forecast there will be six ASEAN countries with high GDP growth this year, including the Philippines (6.9%), Malaysia and Vietnam (6.5%), and Singapore (5.2%), Laos (4.6%), Indonesia (4.3%) and Cambodia (4.2%). Cambodia is also expected to become the fastest growing ASEAN economy by 2026, with GDP growing by 6.8%.

The new optimistic signals from the aforementioned economies are increasing a sense of confidence that the world will escape its “sad” economic year in 2021. However, amid the current serious epidemic situation, if epidemic prevention and control is not carried maintained in a strict and effective manner, prospects of economic recovery will dissipate rapidly.

In addition, a problem that could arise is an uneven speed of economic recovery. Therefore, in order to bring the global economy back on its growth track as before the COVID-19 pandemic, in the coming time, the international community, financial institutions, and governments need to cooperate closely to jointly deal with epidemics as well as stimulating economic demand.