2023 global ushered in the new crown epidemic prevention and control of the transition, economic recovery has become the key words of all countries, but the new crown epidemic left behind the "scar effect" is difficult to completely recede. Russia, Ukraine, Palestine and Israel and other geopolitical conflicts intensified, inflation, trade friction, the Federal Reserve interest rate hike, production and supply chain risks and other factors superimposed also test the resilience of the national economy and recovery power. 2024, the world economy can further recovery? Global trade growth rate may face what challenges? Can China continue to seek progress while maintaining stability in the new year? At the beginning of the year, China Youth Daily - China Youth Net reporter invited Zhang Yansheng, chief researcher of China Centre for International Economic Exchanges (CIEE) and former secretary-general of the Academic Committee of the National Development and Reform Commission (NDRC), and Chen Fengying, former director of the Institute of World Economy of the China Institute of Modern Institute of International Relations (CIMIR) and a researcher, to make an in-depth interpretation of the world economic situation in 2024.
Review of 2023: slow growth but higher than expected
"The world economy in 2023 is tougher than in 2022." When looking back at the picture of world economic recovery in the past year, Zhang Yansheng summarised to reporters that in 2023, the global economy as a whole showed a weak recovery. The Organisation for Economic Co-operation and Development (hereinafter referred to as "OECD", OECD) recently in the latest issue of the "Economic Outlook Report" pointed out that the world economic growth rate of 2.9% in 2023, the global economic growth to maintain a moderate trend. "In the new crown epidemic long-term impact remains, geopolitical conflicts intensified, the international situation complex changes, many countries face high inflation in the environment, the global economy suffered setbacks still maintain moderate growth, is not easy."
OECD emphasised in the report that the global economy is still facing greater downward pressure. Zhang Yansheng also pointed out that due to inflation, the Federal Reserve interest rate hikes, a significant portion of developing countries fell into debt crisis in mid-2023, some banks in the United States and Europe also appeared in the liquidity crisis, the global financial risks are rising.
However, what is more noteworthy is that Zhang Yansheng and Chen Fengying both pointed out in interviews that the global economy in 2023 has shown resilience beyond expectations.
"My overall judgement of the world economy in 2023 is a difficult and zigzagging recovery, but the result exceeds expectations." Chen Fengying further analysed, "2023 is the first year of the 'post epidemic era' and a recovery year. The repeated twists and turns it experienced during the recovery process and before the new crown epidemic are completely different, an extraordinary cycle with no pattern to follow, and thus we see that all the forecasts of international agencies are slowly adjusted from low to high, and almost no one can accurately predict the recovery trajectory."
A year ago, the OECD expected global growth to be just 2.2 per cent in 2023, which was eventually revised upwards to 2.9 per cent by the end of the year, with the global economy actually outperforming expectations. The latest edition of the OECD's Economic Outlook Report showed that the U.S. gross domestic product (GDP) growth rate in 2023 was 2.4 per cent, and the eurozone, which has been hit hard by the Russian-Ukrainian conflict and the energy crisis, also maintained a growth rate of nearly 0.6 per cent. Meanwhile, the Bank of China Research Institute released the "2024 Economic and Financial Outlook Report", which shows that in 2023, China's economy gradually shifted from the extraordinary state during the epidemic to normal operation, and it is expected that China's GDP will grow by about 5.6% in the fourth quarter of 2023, and about 5.3% for the whole year, which is still an "economic engine" against the backdrop of the global economic downturn. "The dynamics.
"Almost all major economies achieved positive growth in 2023, which has exceeded our expectations." Chen Fengying analysed that "the resilience of the world economy lies in its underlying logic is still at work, which means that residents are still consuming, and enterprises are still investing under high interest rates and high inflation."
Chen Fengying pointed out that the impact of geopolitics on the global economy has also weakened over the past year, "We can feel that the world economy's tolerance for emergencies has risen, and that regional economic cooperation is moving forward, so we should see that 2023 lays a foundation for 2024, and that foundation is the 'post epidemic era' of weak growth in the world economy."
Outlook 2024: weak growth dynamics to continue
Looking ahead to global economic growth in 2024, expectations show unprecedented caution. The International Monetary Fund (IMF) expects global growth to slow to 2.9 per cent in 2024, while the OECD sees a moderate slowdown to 2.7 per cent in the new year.
The Associated Press reports the key factor contributing to the slowdown in global growth is that the U.S. economy will slow its pace of growth next year. The OECD expects U.S. economic growth to slow to 1.5 per cent in 2024 from 2.4 per cent in 2023 due to 11 interest rate hikes by the Federal Reserve. Chen Wenling, chief economist and deputy director of the Executive Board of the China Centre for International Economic Exchanges (CCEIEX), believes that the U.S. "historic" monetary tightening cycle may come to an end, and that in the new year, when the U.S. monetary policy will shift to loosening, and whether it will once again cause a flood of liquidity is a problem that the whole world needs to be vigilant about.
Morgan Stanley global chief economist Seth Carpenter team that the global economic growth will slow in 2024, but most developed economies will avoid recession, inflation with full employment will decline, real incomes remain firm, which can guarantee the resilience of consumption, so even if there is a recession will be a relatively mild recession.
Also casting a shadow of uncertainty over the global economic picture in 2024 is geopolitics. According to the Harvard Business Review, the US presidential election, trade frictions, and conflicts in Ukraine and the Middle East could have unpredictable consequences for the world economy.
Zhang Yansheng believes that in 2024 trade friction may intensify, electric vehicles, lithium-ion batteries, solar cells, the three major industries or will become the trade friction "hardest hit". 2023 U.S. and Europe have launched an anti-subsidy investigation of China's electric vehicles, 2024 does not rule out the possibility of lithium batteries to launch a double anti-investigation.
For 2024, the world ushered in a "super election year", Chen Fengying believes that this may increase the risk of political polarisation, but for the economy is "not necessarily a bad thing", "election year, the ruling party of each country to protect the economy, which is related to the stability of the regime, so they have to protect the economy, so they have to protect the economy, so they have to protect the economy. This is related to regime stability, so they will not screw up the economy. Therefore, in 2024, while political polarisation may increase, the relative stability of the economy will rise."
Chen Fengying pointed out that global regional economic cooperation is still being strengthened, cooperation in competition still exists, and trade in the midst of weak global growth has not been completely dispersed, all of which make 2024 "a post-epidemic era of sustained weak growth can be sustained, and the factors of relative stability are increasing."
