Stakes require joint efforts against virus to ensure economic growth, forum hears
Coordinated efforts to fight the COVID-19 pandemic are critical to ensure the recovery of the global economy, especially in the face of risks that could undermine growth, analysts said.
At a forum on global issues on Wednesday, Xie Fuzhan, president of the Chinese Academy of Social Sciences, said the pandemic-ravaged economy has started to recover this year, but the challenges that could derail a global rebound warrant attention.
The International Monetary Fund in January revised its projection of worldwide economic growth to 5.5 percent this year, up from 5.2 percent in its October forecast, thanks to a stronger than expected recovery in the past six months, policy support from governments since the end of last year, and vaccination efforts.
"However, the foundation for world economic recovery is weak and faces the potential threat of insufficient sustainability and poor coordination of macroeconomic policies of countries across the world," Xie said.
He said the recession that the world entered in 2020 has been the most severe since World War II. For the first time, all major economic sectors have been hit severely at the same time. Global industrial and supply chains have been disrupted, and trade and investment remain sluggish. In response to the pandemic, countries have introduced massive relief and stimulus measures.
"By the end of December 2020, countries across the world have introduced financial relief measures of a total scale of about $14 trillion, accounting for about 16 percent of global GDP," Xie said. Over that year, central banks in the major economies cut interest rates 207 times, and ultralow interest rate policies have been maintained in many of the big developed nations.
However, there is uncertainty whether these relief measures can be sustained in 2021. If some countries failed to continue these policies or join in with coordinated efforts, then the momentum for the world's economic recovery would be greatly weakened, Xie said.
"Moreover, while vaccines have brought hope to contain the spread of the pandemic, emerging variants of the virus have caused new concerns," he said.
Xie said the fight against the pandemic remains the most pressing task for all countries.
On Wednesday, the Chinese Academy of Social Sciences also released its annual report on the global outlook for 2020-21. The academy highlighted potential risks for the world, including an escalation of the pandemic, volatility in the global financial markets, and a rise in terrorism.
It also said that in some countries this year, political and social divisions will grow.
Leading role for Asia
In Asia, most countries have generally done well in containing the pandemic, helping the region to lead the global economic recovery last year. The trend for Asian growth is likely to continue this year, the report said.
In the United States, where the coronavirus-related death toll has surpassed 500,000, its economy has been severely affected and the unemployment rate remains high.
"The US economic recovery faces some structural problems that are difficult to solve in the short term, including fiscal deficit and high debt, thus, the scope of recovery is relatively limited," said Yuan Zheng, deputy director of the Chinese Academy of Social Sciences' Institute of American Studies.
In hard-hit Europe, the governments and multilateral institutions have relaxed policy controls, increased fiscal spending, and provide targeted support to industries.
Tian Dewen, deputy director of the Institute of European Studies at the Chinese Academy of Social Sciences, said the European Union can coordinate member countries' policies and efforts on economic relief but lacks the power to intervene at the policy level within the member states.
"The EU has always been ambitious and hoped to stick to its economic reform course even amid the deep crisis of the COVID-19 pandemic, such as pushing forward with the green economy and digitalization," Tian said. However, it will be difficult for the bloc to carry out these projects in the pandemic.