Balance, Harmony & Sustainability in Uncertainties: Trends of Development of Global Economy in the Post-Crisis Era
Wang, Lili, International Trade Forum
With the prospect of recovery from the global financial crisis, enhanced by stimulatory spending by national governments, there are forces at work that will assist in developing a sustainable recovery, although some lingering risks remain. Emerging markets can play a key role by continuing to strengthen their participation in global trade and investment with parallel measures aimed at stimulating domestic demand. Rapid development and exploitation of new technology can be relied on to have a positive influence on economic growth and priority should be given to economic and financial reform to build a more secure platform to support expansion and manage risks.
A new day dawns--early signs of recovery from the financial crisis
There is a beautiful poem written by Bai Juyi during the Tang dynasty: 'When spring flowers wither and fall in the early summer wind, you can still find peach blossoms deep in the mountains in a temple's backyard.' The artistic conception of these two lines of poetry exactly describes the current situation at the beginning of this post-crisis era: after three consecutive years of crisis from 2007 to 2009, we finally see the dawn of recovery. Data from the first half of 2010, published recently by international financial organizations, position the major economies just like the peach blossoms, bringing us true feelings of a late spring.
Although there are still some undisclosed financial risks and problems like the sovereign debt crisis of Greece still await solutions, the financial tsunami has begun to subside. Financial institutions worldwide have survived the earthquake and are making their way to a new phase of growth. The global financial system is back on the track of capacity building, global financial supervision undergoes in-depth evolution and there are small possibilities for another round of systemic financial risk to happen in the near future. The large-scale rescue policies and stimulus plans have helped main economies out of the recession into a new phase of recovery. Economic indicators from the United States of America, the euro zone, the United Kingdom, Japan, India and China show signs of recovery in consumption confidence, domestic and overseas demands, real estate, public investment and manufacturing. According to the latest forecast from the International Monetary Fund (IMF), global economic growth this year is expected to reach 6.3%, up from 2.4% in 2009.
A spring of recovery brings hope of harvest in autumn. It is time for economies and enterprises to seize opportunities for spring sowing, which means having forward-looking insight into the trends of the post-crisis era. And the key to a long-term sustainable development, as experience shows, is to 'follow the trend with an innovative mind'.
The path to a sustainable recovery
Looking to the future, the essential character of the next few years will be 'sustainable recovery'. According to the IMF, the global economy's average annual growth should keep to over 3% from 2010 to 2014.
Driving forces for sustainable recovery come from the following aspects: first, as financial innovation becomes more prudential and closer to the real needs of solid economic fundamentals, technological innovation of the real economy and global financial deepening will be further activated, providing impetus to the recovery.
Second, the ongoing rebalance of the global economy will provide momentum to the recovery by optimizing the allocation of global resources. Developed economies will adjust the consumption-driven growth path under high debt levels, while emerging markets will change from being export-oriented to domestic demand-oriented.
Third, in the post-crisis era, each industry, including the banking world, will enhance inter-industry integrity and intra-industry interactivity. The financial crisis not only breaks the old system, it also creates opportunities for comprehensive management and internationalization. …