The IMF raised China’s growth rate forecast to 1.9%, which is expected to be the only country with positive growth this year

  At 20:30 on October 13, Beijing time, the International Monetary Fund (IMF) released the latest issue of the World Economic Outlook (WEO).

Compared with its forecast in June, the IMF raised its forecast for China’s economic growth rate in 2020 by 0.9 percentage points to 1.9%. It is still the only country that is expected to achieve positive growth, and maintains that China will achieve the world’s fastest growth rate in 2021. Of 8.2% growth rate.

  With the lifting of the blockade, global trade began to recover in June, and the IMF mentioned China as an important contributor.

On October 19th, China will announce the third quarter GDP data. Domestic and foreign institutions interviewed by CBN reporters generally predict that the GDP growth rate will exceed 5% year-on-year, and the fourth quarter is expected to reach 6%.

  Despite the rapid rebound of the Chinese economy, the IMF believes that global economic activities are still vulnerable to setbacks in the process of returning to pre-pandemic levels. Without vaccines and effective treatments to fight the virus, the road to global economic recovery will be extremely difficult.

This time, the IMF expects global GDP to shrink by 4.4% in 2020, an increase of 0.8 percentage points from June.

The IMF once again emphasized that the current economic forecast is facing fundamental uncertainty, and believes that countries need to find a balance in the crisis, and do not expect to smoothly advance the economic restart when the infection rate is still high.

Blockade measures can greatly reduce the infection rate. If a country takes blockade measures at the beginning of the epidemic, the effect will be particularly obvious.

Strict short-term blockade measures may be preferable to moderate long-term measures.

The road to global economic recovery remains bumpy

  The reason why the IMF has increased its global economic growth forecast is partly because the economy has restarted faster than expected since the second quarter, but in the face of the increase in the number of new infections, countries slowed the pace of reopening in August, and In some cases, partial blockades were restored.

Therefore, reopening or stagnation, the IMF remains cautious about the prospects for recovery.

  The IMF expects global GDP growth to be -4.4% in 2020, and -5.2% in June.

However, the IMF lowered its 2021 global economic growth forecast by 0.2 percentage points to 5.2%.

According to the IMF, the upward revision of economic growth expectations in 2020 reflects the net impact of two competing factors-better-than-expected GDP data in the second quarter will bring upward momentum, while continued isolation measures and the stagnation of countries’ economic restarts Will lead to a downward trend.

  As the second quarter GDP of the United States and the Eurozone was better than expected, the IMF raised its 2020 economic growth forecast for advanced economies by 2.3 percentage points to -5.8%, but lowered its 2021 growth forecast for advanced economies by 0.9 percentage points as a whole To 3.9%.

Among them, the US GDP growth rate is expected to be -4.3% in 2020, compared to -8.0% before; the euro zone GDP growth rate is -8.3%, which was -10.2% before.

  For emerging and developing economies, the IMF further lowered its 2020 growth forecast by 0.2 percentage points to -3.3%, but raised its 2021 economic growth forecast by 0.2 percentage points to 6%. This is similar to some Asian countries. More effective epidemic prevention work is not unrelated.

  The most obvious indicator of strength from the trough in April is retail. This is partly due to government support measures. The IMF also emphasized the importance of relief measures this time, and the United States is the best example.

Not to mention that U.S. stocks have set a new record high under the support of the Fed’s unlimited quantitative easing (QE). The overall U.S. economic data looks good in the past six months, and it is even on the road to recovery. The US$3 trillion fiscal stimulus policy issued by everyone has stabilized 70% of the consumption of the US economy through the "big money" of everyone.

It is precisely because of this that when the economy is shut down and there is a large number of unemployment, the cash income of American families has skyrocketed. Many people receive more unemployment benefits than they earn from normal work.

  Of course, this kind of relief measures hope that the economy will restart after the epidemic and quickly return to "endogenous growth."

But now it seems that the economic restart has begun to stagnate again.

The IMF mentioned that the deep trauma caused by the widespread recession to the global economy is more obvious in the employment market indicators.

According to the International Labor Organization, the number of full-time jobs in the second quarter of 2020 decreased by 400 million.

  The IMF believes that there are still many uncertainties in the future.

The possibility of economic revision includes faster-than-expected economic recovery, production of safe and effective vaccines, etc.; but downside risks are also significant, including: the epidemic may make a global comeback, and countries may withdraw supportive policies or launch policies that are targeted. Very poor, financial conditions may tighten again, liquidity shortages and corporate bankruptcies, trade policy uncertainties and technical frictions.

China's economic recovery exceeds expectations

  The IMF mentioned several times that China's economic recovery has exceeded expectations, and the rebound momentum is expected to accelerate next year.

  The outside world generally expects that China's GDP data released on October 19 will perform well.

"Under normal circumstances, the GDP growth rate in the third quarter is around 5%, and the fourth quarter is around 6%, which is quite in line with expectations. The macroeconomic policy in the fourth quarter will be based on range control, targeted control, camera control and precise control. The principle of orderly advancement." Founder Securities chief economist Hue told the CBN reporter.

  Standard Chartered China Chief Economist Ding Shuang told reporters that economic growth is expected to reach 5.5% in the third quarter and accelerate to 6.3% in the fourth quarter (previously expected 6.1%).

"The PMI of manufacturing and non-manufacturing in the third quarter improved further compared with the second quarter, indicating that production expansion accelerated. Driven by strong production activities and the recovery of the service industry, the GDP in the third quarter is expected to rise sharply from 3.2% in the second quarter." Domestic manufacturing in September The industry PMI increased by 0.5 percentage points from August to 51.5%. The average PMI in the third quarter remained above 51%, exceeding the average of 50.8% in the second quarter.

  Lu Ting, chief economist of Nomura China, told reporters that China’s epidemic prevention results and economic restart progress should be recognized by the market, but compared with investment and exports, the weak recovery of consumer consumption should also cause concern. “Maintain China in the third and fourth quarters. The forecasts that the actual GDP growth rate will reach 5.2% and 5.7% respectively remain unchanged, and it is expected that the'wait and see' policy model will be maintained in the second half of the year, and there will be no further increase or tightening of easing."

  It is worth mentioning that China's economic recovery is not only boosted by domestic demand, but is brought about by the overall improvement of internal and external demand.

In September, PMI's new export orders returned to the expansion area for the first time since the beginning of this year.

In addition, the sub-indices of PMI's new orders, imports and purchase volume all hit new highs in the past two years.

  According to data released by the General Administration of Customs on October 13, the total value of China's imports and exports in September increased by 11.4% in US dollars.

Among them, exports increased by 9.9% year-on-year; imports increased significantly by 13.2% year-on-year; trade surplus was US$37 billion.

In RMB terms, the total value of my country's imports and exports of goods trade in the first three quarters was 23.12 trillion yuan, a year-on-year increase of 0.7%, and the cumulative growth rate of foreign trade imports and exports turned positive for the first time this year.

The world seeks balance in a crisis

  However, the epidemic has not yet passed. For some time to come, the IMF also recommends that the world should continue to seek a balance in the crisis. It not only emphasizes the importance of isolation measures, but also pays attention to the relief of vulnerable groups affected by isolation measures.

  The IMF mentioned earlier that if the infection rate of the new crown pneumonia epidemic is still high and voluntary social distancing may continue to exist, it is unlikely that the lifting of the blockade measures will bring a truly strong and sustainable boost to the economy.

  The IMF uses two high-frequency alternative indicators of economic activity-Google personnel turnover data and job vacancy data published on the Indeed website, and analyzes the economic impact of blockade measures and voluntary social distancing. The analysis uses all of the 128 countries. In the sample, during the first three months of the epidemic in a country, lockdown measures and voluntary social distancing led to a reduction in the movement of people to the same extent.

In advanced economies, voluntary social distancing is more effective.

This is because in advanced economies, people can work from home more conveniently, or they can even temporarily stop working due to personal savings and social security benefits.

On the contrary, in low-income countries, because people do not have the economic means to deal with temporary loss of income, they often cannot choose to voluntarily maintain social distance.

  At the same time, voluntary social distancing has largely contributed to the reduction of personnel turnover and job vacancies. The IMF believes that this should remind policy makers not to cancel blockade measures in anticipation of restarting economic activities when the infection rate is still high. The health crisis appears to be a prerequisite for a strong and sustainable economic recovery.

  However, research also shows that the crisis is having a greater impact on more vulnerable groups.

The data on the movement of people and materials in Italy, Portugal and Spain provided by Vodafone, a British telecommunications company, shows that "staying-at-home orders" and related school suspension measures have led to a greater decline in the mobility of women than men.

This impact is largely due to women’s greater responsibility in taking care of their children, and the epidemic may prevent them from working.

Therefore, the IMF believes that targeted policy interventions must be taken, such as increasing unemployment insurance payments, and providing parents with paid leave and other support measures, in order to provide protection for the more vulnerable groups and ensure that the crisis will not lead to continued inequality.

  Author: 4. Alina Cho