(Viewing things) Interview with Chief Economist of Swiss Re: Inflation will not restrict global recovery
China News Service, Beijing, July 27th. Title: Interview with Chief Economist of Swiss Re: Inflation will not restrict global recovery
China News Agency reporter Wang Enbo
In response to the impact of the new crown epidemic, all parties have introduced unprecedented large-scale stimulus measures to help themselves last year.
Although severe illness should be used as a strong medicine, its side effects are also appearing.
Under the ultra-loose policy environment, the global inflation alarm is sounding, and it has become a major worrying factor in the economic recovery of many countries.
Swiss Re's chief economist, Jerome Jean Haegeli, predicted in an exclusive interview with a reporter from China News Agency that inflation will not constrain the overall recovery. However, due to the reduced resilience of the global economy, risks are still growing.
Easy policy is difficult to change in the short term
The latest data shows that the US CPI in June increased by 5.4% year-on-year, exceeding market expectations.
"Inflation is becoming a global concern and arouses widespread concern in the market." An Renli predicts that this year's inflation rate in all major markets will be higher than last year, and that the US inflation rate will be higher than the target of 2% this year and next year.
The acceleration of consumer spending due to reopening may cause the economy to overheat and increase the risk of inflation.
He analyzed that a higher inflation rate is not only a policy choice, but also the result of various governments adopting expansionary and aggressive fiscal and monetary policies in response to the impact of the epidemic.
The government re-enacted fiscal rules to provide households and businesses with unprecedented direct transfer payments to respond to the impact of the epidemic. At the same time, it adopted loose monetary policy and provided the lowest credit threshold ever. The central bank also stated that it will tolerate the This creates inflationary pressures.
An Renli believes that by the end of 2023, the world's major central banks will still maintain a moderate stance on inflation.
The annual inflation growth rate in the United States is expected to reach 3.7% and peak within the year; the inflationary pressures in China throughout the year are controllable, and the annual CPI growth rate is expected to be 1.7%, which is lower than the 3% policy target.
He said that given that major central banks in developed markets are expected to tolerate higher inflation, the stance of continuing loose monetary policy and proactive fiscal policy will not change in the short term, and the economy will still be strongly supported, so it will not restrict the recovery of the global economy.
COVID-19 reduces global economic resilience
Since the new crown pneumonia epidemic, some economies have been in trouble.
According to An Renli, according to the assessment of the Swiss Re Institute, the policy measures to deal with the epidemic will reduce the global economic resilience in 2020 by nearly 20% compared with 2019.
Looking ahead to the next 12 months, new developments related to the new crown pneumonia epidemic may be the main downside risk facing the global economic recovery.
He said that the emergence of new mutant strains may force countries to re-take blockade measures and inhibit economic recovery.
Given that the current economic growth also benefits from unprecedented policy stimulus measures, if the real economy recovers less than expected, or the central bank starts monetary policy normalization (reduction of debt purchases) earlier than expected, global financial risks may rise and economic growth May be slowed down.
"We believe that the probability of global economic growth facing downside risks is about 20%."
An Renli also mentioned that although the current total global fiscal stimulus measures are unprecedented, only 4% of them are invested in the field of sustainable infrastructure, which was 16% during the 2008 global financial crisis.
As one of the key factors driving economic growth, infrastructure projects can create more jobs, improve transportation connectivity, and directly boost productivity, but at the moment all parties are far from investing in sustainable infrastructure.
China's development ideas benefit the world
In the process of global recovery, China is among the best.
In the first half of this year, China's economy grew by 12.7% year-on-year, achieving a stable recovery.
An Renli believes that China's economic growth rate will reach 8.3% this year, continuing the strong recovery trend.
Compared with developed countries, China has more room for monetary policy, which helps to withstand external shocks.
He said that in the second half of the year, China's economy will mainly benefit from the continued recovery of investment and consumption.
On the investment side, given the relatively slow pace of local bond issuance in the first half of the year, the scale of bond issuance will increase significantly in the second half of the year, which will drive steady growth in fixed asset investment.
The rapid advancement of vaccination will help stabilize the results of China's national defense epidemic, promote the recovery of the service industry represented by domestic tourism, and drive the continuous recovery of overall consumption growth.
It is worth mentioning that, despite the fact that economic growth ranks among the top, China now pays more attention to the quality and sustainability of growth.
An Renli said that this is the correct development strategy that countries around the world should adopt.
This long-term development approach will help improve the economic structure, promote the transformation of the economy to a sustainable development model, and enhance the ability to respond to external shocks, thereby benefiting countries around the world.
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