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THE GLOBAL economic recovery that is expected this year seems to face tough challenges. The emergence of the faster-transmitting Delta variant of COVID-19 has raised concerns around the world. Many countries are currently facing a new wave of COVID-19 cases.
This condition will certainly hamper the achievement of the world economic growth target that has been set this year. Several world institutions have started to cut their economic projections.
The Asian Development Bank (ADB), for example, sees the economic growth of developing countries in Asia this year will be slightly lower than the previous projection. Therefore, the institute has revised down its projection for the Asian economy this year to 7.2% from the previous projection of 7.3%.
However, the projection for Asian economic growth next year is raised to 4.4% from the previous estimate of only 5.3%. ADB maintained its growth forecast for China at 8.1% this year and 5.5% next year. However, India’s growth projection this year was lowered from 11% to 10% and next year it was revised from 7% to 7.5%.
For ASEAN, ADB revised down economic growth in 2021 from 4.5% to 4.1% for Indonesia, Thailand from 3% to 2%, Malaysia from 6% to 5.5% and Vietnam from 6.7% to 5. 8%. Meanwhile, Singapore’s economic growth projection is raised from 6% to 6.3% and the Philippines is maintained at 4.5%.
Similarly, ADB’s Chief Economist Yasuyuki Sawada said the recovery in the Asia-Pacific region from the effects of the pandemic was still continuing, although the road remained precarious amid new outbreaks, new virus variants, and uneven vaccine launches.
Meanwhile, the International Monetary Fund (IMF) still maintains its projected global economic growth of 6% in 2021. Some countries are projected to grow faster, but some others will grow slower.
According to IMF Managing Director Kristalina Georgieva said the economic recovery would be hampered unless the pace of COVID-19 vaccination was increased. The target of ending the pandemic by the end of 2022 is not expected to be achieved if the pace of vaccination remains at current levels.
Although targets are maintained, Georgieva stressed, the relative lack of access to vaccines in developing countries and the threat of rapid spread of the Delta variant could slow the momentum of economic recovery.
China is also facing a new wave of COVID-19. This is likely to curb retail spending and economic growth in the second half of the year. Nomura Holdings lowered its forecast for the country’s GDP growth in 2021 to 8.2% from 8.9%.
But on the other hand, the flow of exports of Chinese technology goods is apparently still increasing despite the trade war with the US. Based on the latest research by Harvard University’s Growth Lab, the Index measures the diversity and technological sophistication of a country’s exported goods and their export volume, China is ranked 16th globally in the complexity of its exports in 2019. Up three places from the previous year.
According to Tim Cheston, senior research manager at the Growth Lab, data shows China is able to improve its ranking by exporting to other regions amid US tariffs. There have been skillful moves by China to diversify its export destinations for electronics to Europe and elsewhere.
While data after the impact of COVID-19 is not yet available, it is predicted that the ranking will likely rise due to a surge in Chinese exports. Cheston said there were signs that China would continue to gain market share in the sectors as it was able to keep production going.
However, a high rating does not guarantee rapid economic growth. China’s export performance contrasts with India’s where its ranking dropped to 43 in 2019. This indicates that China’s economic growth will outpace India’s over the next 10 years. [sources/photo special]
