Abstract Recently, the second quarter data of the world's major economies have been released one after another. Many economies have set their lowest values, and some countries have fallen into severe economic recession. Among them, China's economic performance has become the highlight of the global economy. According to data from the National Bureau of Statistics of China, it experienced a negative growth of 6.8% in the first quarter...
Recently, the second quarter data of major global economies have been released one after another. Many economies have reached the lowest value, and some countries have fallen into severe economic recession. Among them, China's economic performance has become the highlight of the global economy.
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According to data from the National Bureau of Statistics of China, after experiencing a negative growth of 6.8% in the first quarter, my country's GDP in the second quarter increased by 3.2% year-on-year, successfully achieving a V-shaped rebound, and becoming the only major economy in the world to achieve positive growth.
After experiencing the impact of the epidemic, when will the global economy recover? Why can the Chinese economy rebound? What will the recovery of the Chinese economy bring to the world economy?
●Beijing reporter Zhao Xiaona of Nanfang Daily
The epidemic has plunged the global economy into a severe recession
Preliminary statistics released by the Cabinet Office on August 17 show that, excluding price changes, Japan’s real GDP in the second quarter fell by 7.8% month-on-month, equivalent to a 27.8% annual growth rate. So far, Japan has experienced three consecutive quarters of negative growth, which exceeded the 17.8% decline in the first quarter of 2009, the largest decline since comparable data.
Affected by the national emergency, Japan’s domestic demand dropped sharply in the second quarter, contributing a negative 4.8% to economic growth. Among them, personal consumption, which accounts for more than one-half of the Japanese economy, fell by 8.2% month-on-month, becoming the main factor dragging down the economy; corporate equipment investment fell by 1.5%; residential investment fell by 0.2%.
Japan is not the case. Since the beginning of this year, the new crown pneumonia epidemic has plunged the global economy into a severe recession. The World Economic Outlook Report released by the International Monetary Fund (IMF) in June predicts that the global GDP growth rate in 2020 will be -4.9%, which is the most pessimistic forecast in history.
The recent data released by various countries are continuously confirming this prediction, including many major economies in the world. For example, the real GDP of the U.S. economy fell by 9.6% in the second quarter, and the annualized rate fell by 32.9%, a record low since 1947.
The performance of the European economy is also worrying. In the second quarter of this year, the gross domestic product (GDP) of the European Union and the Eurozone fell by 11.9% and 12.1% respectively from the previous quarter and 14.4% and 15% year-on-year respectively. These statistics have been available since the EU began in 1995. The largest economic decline ever encountered.
According to Bloomberg News, Germany, France, and Italy announced at the time the unprecedented contraction rate was 10.1%, 13.8%, and 12.4%, respectively. In the United Kingdom, which was "Brexit" on January 31, its economic output plummeted by 20.4% in the second quarter, making it the worst-performing country among the world's major economies. It also officially dragged the United Kingdom into a serious economic recession.
India has not yet released the second quarter economic data, but the authoritative investment bank Goldman Sachs Group analyzed that India’s second quarter GDP annualized quarterly rate may shrink by 45%. Like the United States, it has fallen into the worst economic recession in history. The International Monetary Fund lowered its expectations for the Indian economy in June.
The Brazilian economy is not optimistic either. According to Brazil’s “Economic Value” report, the Brazilian Economic Activity Index (IAE) published by the Vargas Foundation shows that in the second quarter of this year, Brazil’s GDP will shrink by 11.2% compared to the first quarter, and the April economy fell sharply to the second quarter GDP. The main reason for the decline.
Li Chunding, a professor at the School of Economics and Management of China Agricultural University and director of the Institute of International Economics, said that the epidemic began to spread and broke out in major developed economies such as Europe and North America in mid-March. The second quarter was the peak of the epidemic. Most economies have adopted a certain degree of suspension of work and production and home isolation measures, coupled with the limited experience of countries in the early stages of the global outbreak of the epidemic, will inevitably lead to a decline in economic growth and employment or even a decline.
China may become the only major economy with positive year-on-year growth
After experiencing a sharp economic decline at the beginning of the outbreak, China became the world's first economy to recover. On July 16, the National Bureau of Statistics of China released the national economic performance data for the first half of 2020. After a 6.8% economic slowdown in the first quarter, China's GDP grew by 3.2% year-on-year in the second quarter, making it the world's first economy to resume positive growth.
From a month-on-month perspective, after the first quarter's GDP fell by 10.0%, China's second-quarter GDP growth reached 11.5%, making the second quarter's GDP achieved a 0.35% increase compared with the fourth quarter of 2019 before the outbreak. .
Zhou Mi, a researcher at the Research Institute of the Ministry of Commerce, wrote an article that China’s quarterly GDP has basically maintained steady growth in recent years. Since the first quarter of 2015, China's GDP growth rate has basically stabilized at 1.2%-2.0% month-on-month, while the year-on-year growth rate has been between 6.0% and 7.0%. Compared with the previous 20 quarters, the performance of the first two quarters of 2020 is rather special, but the rebound in total GDP may be a sign that the economy is back on track.
The International Monetary Fund (IMF) predicts in the latest issue of the World Economic Outlook that China will become the only major economy in the world to achieve positive year-on-year growth in 2020, and predicts that China’s GDP will grow by 8.2% year-on-year in 2021.
Li Chunding believes that China’s positive economic growth in the second quarter benefited from the effective control of the epidemic. Since March, the epidemic in China has been basically brought under control, and the resumption of work and production in various industries has gradually recovered, and the impact of the epidemic in China is relatively limited. The economic performance in the second quarter is satisfactory.
"More importantly, the resilience and elasticity of China's economy enables it to quickly adjust the direction of production and demand, open up new export markets, launch domestic demand markets, and promote the development of new trade formats under the situation of declining external demand. It has achieved growth against the trend in the overall environment of China," said Li Chunding.
In the context of the impact of the epidemic and shrinking external demand, my country has successively introduced a number of macro-control policies and support policies, including a series of measures such as "six stability", "six guarantees" and "two renewal". These measures have already taken effect. Li Chunding believes that these policies and measures are powerful and timely, and have effectively promoted my country's economic growth.
Be vigilant against the continuing impact of the epidemic on the global value chain production chain
"The last overall recession of the global economy was the 2008 global financial crisis. The short-term impact and negative impact of the new crown epidemic was even greater than the last global financial crisis." Li Chunding said that after the 2008 global financial crisis, countries have adopted Thanks to a large-scale proactive fiscal and quantitative easing monetary policy, and driven by a series of market rescue measures, the world economy did not gradually recover until 2011, and it was only in 2013 that it completely recovered from the impact of the financial crisis.
Li Chunding said that the global economic contraction brought about by the new crown epidemic, the extent of its impact and the length of its duration, mainly depend on the prevention and control situation of the epidemic. Different from the impact of the global economic or financial crisis, the impact of the epidemic is mainly an exogenous impact. As long as the epidemic is controlled or the impact on production and life is effectively eliminated, coupled with the fiscal and monetary support policies of various countries, the world economy can be more economical. Recovered quickly.
said in a thorough manner that, compared with being caught off guard during the outbreak of the new crown pneumonia at the beginning of the year, governments of various countries have accumulated more experience in the process of public health management and epidemic prevention and control, and the desire to develop the economy is more urgent. On international economic governance platforms such as G20 and APEC, all parties have expressed a strong willingness to adopt coordinated measures to reduce restrictive measures on trade and investment.
International rating agency Moody's also predicts that starting from the second half of this year, the economies of various countries will gradually recover. The final result depends on whether governments can reopen their economies while protecting the health of the people. The degree of demand rebound will determine the ability of companies and labor markets to recover from severe shocks.
However, some experts have reminded that global economic or financial crises are often accompanied by inherent contradictory crises or imbalances in the economic system, which require the slow adjustment of internal mechanisms to recover gradually, and recovery often takes longer. This global economic contraction is mainly a short-term supply and demand shock, but if the epidemic continues to impact and affect the global value chain and production chain, the impact will be more profound.
Zhou Mi said in the article that as the world’s largest trading country in goods, China has become an important trading partner of more and more countries through its strong manufacturing capabilities, R&D and innovation capabilities, and the first-mover advantage of resuming production and production. Various methods such as investment actively participate in supporting the economic recovery of various countries.
"The recovery of China's economic growth has added momentum to the recovery of the world economy." Li Chunding said that the recovery of China's economic growth will bring new demand and supply to the world economy and become a growth point for the global economy. On the other hand, China's economic recovery path and anti-epidemic measures have provided models and experience for countries around the world, and at the same time injected confidence in the growth of the world economy and brought positive expectations.
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