Over the past few months, economists have been spreading the worry of impending doom in the economy. Their theory was that with so many changes in the interest rate and investment due to COVID, that the global economy was on the verge of falling into a deep recession. Countries refusing to trade with Russia, China closed to other countries due to COVID laws, and the high US interest rates were all major factors in forming the economist's opinions. In recent weeks though, the US, China, and Europe have proven these predictions wrong.
All three economies have been improving over the last few weeks due to more participation in the American workforce, China abruptly opening its borders to other countries again, and Europe surprisingly handling not trading with Russia for their oil. The International Monetary Fund also forecasts that global growth increased by 0.2 from its initial estimate in October, showing that the whole world is starting to bounce back from the tough fall of COVID.
The biggest surprise to economists was China deciding to open its borders and ease on their harsh COVID restrictions. The second largest economy in the world opening its borders will help the whole world recover. Trades with China will skyrocket and bump up activity in the global economy.
https://www.washingtonpost.com/business/2023/01/30/imf-global-economy-improving/
3 comments:
China deciding to abruptly open its borders is an incredible result for the international economy, but I imagine that China was also suffering from the protectionist policies and received extensive critiques from various countries. I would be hesitant about the increase in participation in the American workforce given that there is still pressure on multiple sectors for higher wages and the incredible increases in job openings.
Great post Dillon! My post was very similar and I found it extremely interesting how economic systems can be affected here in the US by other countries. China abruptly opening I think caught a lot of people off guard and didn't give the FED enough time to prepare. The FED has obviously raised interest rates after their meeting Wednesday, but I think we will see more hikes in interest rates because of the sudden increased international product demand. It will definitely be interesting to watch as it all unfolds, especially as the economy is growing and demand is continuing to increase. I am intrigued to see if that demand goes down quickly, hopefully giving the FED a chance to begin lowering interest rates and stabilizing inflation rates.
Overall, great post!
I think it is fascinating to watch the global economy prove economists wrong. This gives me hope as someone who will be entering the workforce soon after graduation and it's great to see that there are higher participation rates in the American workforce.
In ECON 259 last semester, I did a blog post about China and about their protests regarding the ongoing COVID restrictions and how this could lead to
constituents wanting to overthrow their current leader. I think that based on this discourse, it isn't really a surprise that they would be more open to the idea of reducing their restrictions to keep control.
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