Kathmandu, December 31
Will the world economy, which was in crisis due to the coronavirus epidemic, recover in 2022? Leading global studies have shown that the world economy will grow at an average of 4.9 percent in 2022.
This is a positive increase compared to minus 3.1 in 2020, but almost one percent less than the 5.9 percent in 2021.
According to the latest data released by the International Monetary Fund (IMF), the economy is expected to grow by 5.9 percent in 2021. The world’s largest economies, including the United States and Europe, grew at 5.2 percent in 2021, while emerging economies including China, India, ASEAN, Russia and Brazil grew at 6.4 percent this year. Worryingly, the economies of low- income developing countries have grown by only 3 percent.
In the coming year 2022, the share of countries with big economies will be more. According to the fund, the economies of low-income countries will improve somewhat to 5.3 percent, but the problems created by covid have increased uncertainty in these countries. Neighboring China is projected to grow at 5.6 percent in 2022, while India is projected to grow at 8.5 percent.
The fund said that even if the pace of recovery of the world economy continues, economic
growth will not be as fast as expected, and uncertainty will remain. Sanctions imposed by
various countries, especially on newer variants of the coronavirus, have increased uncertainty and apprehension in economic development.
The fund aims to make the economy more dynamic and dynamic only through global access to coronavirus vaccines and timely reforms in economic policies. Recent reports have also shown that there is a disparity in economic recovery due to widespread disparities between developed and poor nations in the distribution of anti-covid vaccines, which will be widened by both the World Bank and the IMF.
The world’s leading economists are warning that inequality in vaccine distribution will
exacerbate unemployment and economic inequality, and that millions of people around the
world will fall back into poverty.
On the other hand, the prices of consumer goods have gone up worldwide and this trend will continue in 2022. Compared to the previous year, inflation has increased further. Especially in emerging markets, commodity prices will come under pressure as prices of imported goods have risen due to high food prices, rising fuel prices and pressure on the currency exchange.
According to Ana Palacio, a former Spanish minister and former World Bank vice-president, the economic recovery in the current crisis is moving too unevenly. Economic recovery has accelerated in developed countries, where the successful production and use of covid vaccine has been accelerated.
Vaccines are widely available in developed countries, and they are administering a third, fourth dose of booster dose. In economically weak countries, most people have not been able to get a single dose of the vaccine.
”On the other hand, the current cycle of travel bans and lockdowns, along with disruptions in the supply system and rising fuel prices, is creating the opposite situation,” he said. At the same time, amid growing financial risks and inflationary pressures, policy makers and international financial institutions face the challenge of finding a balance.
The trade war between the two countries, which began in 2018 after former United States
President Donald Trump raised taxes on Chinese-made goods one after another before the
Covid epidemic began, created an unusual situation in the world economy.
Taxes on imported goods eventually disrupted supply systems around the world, disrupting
trade.
The instability is expected to improve somewhat after Democratic Party leader Joe Biden is elected president, but differences with China over human rights, border issues, Taiwan and the South China Sea dispute have now overshadowed the trade war.
At a direct virtual summit between the presidents of China and the United States on November 16, economic issues were overshadowed by geopolitical issues. At the meeting, Biden accused China of pursuing ‘unfair trade and economic policies’that hurt the interests of American workers.
During the meeting, President Biden irritated China by raising the issue of human rights
violations in Xinjiang, Tibet and Hong Kong. Biden, however, sought to reassure China that the United States wanted to compete with China but did not want a conflict.
The point to consider here is that despite meeting and negotiating with the presidents of China and Russia to strengthen Indo-Pacific military cooperation and ignoring superpowers like Russia and China, US President Joe Biden convened a democracy summit in the coming days to address other burning issues, including global economic development. Obstacles seem to be coming. The move has been criticized as further complicating relations between the two countries.
Many countries in the world struggling with the covid crisis are seeking greater international assistance and partnership from developed countries and organizations, including the United States, but have not been able to get the desired economic, technical and other assistance.
According to the US Carnegie Endowment for International Peace, the trade war between the US and China has left both countries with little to gain. According to Carnegie, the trade war is now in danger of turning into a Cold War and is ultimately putting both countries and the world economy in a precarious position.
According to Carnegie, the administration of US President Joe Biden has started imposing more blockades on China instead of adopting a softer policy.
There is no dispute that the relationship between the United States and China is of great
importance in world economic politics in the contemporary world. These two countries are now number one and number two in the world economy.
Despite the United States’ continued efforts to reduce its growing Chinese influence in the world’s economic and political spheres, China has continued to move aggressively. Despite the economic downturn created by Covid, China is pushing for an ambitious Belt and Road (BRI) project to mature itself in a mature way with the world economy.
China is expanding its high-speed rail service to neighboring East Asian countries, including Laos and Vietnam, and there are reports that rail projects in West Asia are moving forward at a faster pace. China is also expanding its influence at the diplomatic level by increasing
investment in African and South American countries, as well as making vaccines against
cobwebs widely available.
Nouriel Rubini, a professor in the economics department at New York University, wrote in an article in Project Syndicate that the new variant of Covid will have new challenges in 2022. He said that despite the steps taken by the central banks to improve the policy level, there was a situation of geopolitical and systemic risk.
With the World Health Organization (WHO) warning that it will take a few more years for
people to recover from the crisis, there is no doubt that donor agencies such as the World
Bank, Asian Development Bank, International Monetary Fund and rich nations need financial and technical assistance for the economic development of weak economies like Nepal. Initiatives at the international level are also needed to address the growing economic inequality between rich and poor nations.
(Based on international news)
By Karuna Thapa
