How to deal with the "stumbling block" of recovery?

(Finance and Economics) How to deal with the "stumbling block" of recovery?

　　China News Agency, Beijing, August 1 (Reporter Wang Enbo) Recently, some major world economies have successively released the second-quarter gross domestic product (GDP) data.

In the face of multiple challenges such as repeated epidemics, regional conflicts, and high inflation, all parties are working hard to push forward, but the road ahead is still full of uncertainty.

　　Among the two major economies, China and the United States, China took the lead in publishing the report card.

In the case of the deep decline of major economic indicators in April, China has effectively responded to the impact of unexpected factors, and the economy has withstood the pressure and achieved positive growth in the second quarter.

In the first half of this year, China's GDP grew by 2.5% year-on-year.

　　Data released by the U.S. Department of Commerce later showed that U.S. GDP fell 0.9% on an annualized basis in the second quarter of this year.

Following a 1.6% decline in the first quarter, the U.S. economy shrank again, raising concerns about a "hard landing" in the market.

　　Lv Haomin, a postdoctoral fellow at the Bank of China Research Institute, analyzed that according to statistics from the World Federation of Large Enterprises, the U.S. consumer confidence index fell to 95.7 in July, down 2.7 from June and hitting a new low since February 2021.

Concerns about inflation, especially higher gasoline and food prices, weighed on consumption.

　　High inflation also dampened demand, leading to an across-the-board contraction in factory orders and production.

According to statistics from S&P Global, the initial value of the U.S. Composite Purchasing Managers’ Index (PMI) in July was 47.5.

Among them, the initial value of the service PMI was 47, the initial value of the manufacturing PMI was 52.3, and the initial value of the manufacturing output index fell below the 50 line of prosperity and decline, hitting a new low in two years.

　　Turn your attention to Europe.

Preliminary data released by Eurostat showed that in the second quarter of this year, the GDP of the euro area increased by 0.7% month-on-month, and the GDP of the European Union increased by 0.6% month-on-month.

　　Specific to each country, the GDP of Germany, the number one economic power in the EU, recorded zero growth in the second quarter, while the GDP of France, Spain and Italy increased by 0.5%, 1.1% and 1.0% respectively.

　　The European economy as a whole keeps growing, but there are still many troubles.

This summer, many European countries have encountered high temperatures, and energy is already tight. In addition, Russia continues to restrict natural gas supply, which may lead to aggravated "gas shortage" in Europe, dragging down economic recovery.

In addition, the inflation rate in the euro zone in July reached a record high of 8.9% on an annual basis, and the European Central Bank's policy formulation is facing more constraints.

　　In Asia, South Korea's GDP grew 0.7% quarter-on-quarter and 2.9% year-on-year in the second quarter.

However, South Korean officials did not dare to be careless, emphasizing that the economic downside risks are increasing, and factors such as multiple uncertainties may restrict economic growth in the second half of the year.

　　The situation in Japan, which has yet to release the latest data, is hardly optimistic.

According to an estimate by the Cabinet Office of Japan in July, the real GDP growth rate of the Japanese economy in fiscal 2022 is expected to be 2.0%, a sharp downward revision from the 3.2% outlook in January.

　　In the second half of the year, will the prospects for economic recovery improve?

The International Monetary Fund (IMF) and the World Bank have recently lowered their forecasts for world economic growth for the whole year, showing a lack of confidence in this.

　　Soaring inflation is seen as the main "stumbling block" to the economic recovery.

In order to control high inflation, some major central banks are tightening monetary policy at a faster pace and at a larger scale.

The Federal Reserve has raised interest rates by 75 basis points twice in the past two months, and the European Central Bank recently announced its first interest rate hike in 11 years.

　　Swiss Re's Swiss Re Institute has warned that a host of risks are pushing the world economy into an inflationary recession.

Continued high inflation and accelerated monetary tightening will dampen growth in major economies over the next 12 to 18 months.

In particular, a sharp slowdown in economic growth due to the Federal Reserve's monetary policy may be unavoidable.

　　The Bank of China Research Institute reminds the need to pay close attention to global liquidity and financial market stability.

The accelerated tightening of monetary policies in developed economies such as the United States will raise the interest rate center of major reserve currencies, tightening global liquidity, leading to large-scale capital outflows from emerging economies, increasing their exchange rate depreciation and debt default risks.

　　It is worth mentioning that, in sharp contrast to the high international inflation, China's prices continued to operate within a reasonable range. In the first half of the year, the consumer price index (CPI) rose by an average of 1.7%, which was significantly lower than that of other major economies.

　　Yi Gang, governor of the People's Bank of China, said recently that China's inflation is low and expected to remain stable. Affected by the epidemic and external shocks, China's economy is facing certain downward pressure. support.

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