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Global Economy

The ebbs and flows of global economic conditions, trade and capital flows, thus have substantial implications for the Australian economy, and Australia’s major regional trading partners. Understanding the broad trends, and identifying emerging challenges and opportunities within the global economy, is central to the work of the International Economy Program at the Lowy Institute.

The highly integrated nature of the modern global economy became especially evident during the 2008 global financial crisis. What began as a localised problem within the residential asset-backed securities market in the United States, eventually brought down major financial firms across the Western world, and ultimately pushed the United States and Europe into a deep and prolonged recession. Although global economic growth has recovered somewhat since 2008, it is still much lower than pre-2008 trends, and the hangover from the crisis has manifested itself in the form of high unemployment levels throughout much of the developed and developing world, as well as an increasing level of inequality both within and between countries.

Understanding the economic rise of Asia, and particularly of the growing middle class within Asia, is also crucial to the broader work of the Lowy Institute. Political economy analysis on major players in the region, chiefly China, India and Indonesia, features heavily in the work of the East Asia Program and the International Security Program.  

Costly cargo: The plight of seafarers in a pandemic

Amid the many consequences of the coronavirus pandemic, thousands of seafarers around the world are now locked onboard their ships with expired contracts and unable to get home. In a normal month, approximately 100,000 seafarers leave their ships and are replaced by others, but travel

The economics of national security in Hong Kong

In the late hours of Tuesday evening last week, China’s new national security law for Hong Kong came into force. Seen by many as a response to the pro-democracy protests that erupted in the city last year, the law criminalises four types of national security offenses: sedition, subversion,

Indonesia: Still caught between trade and protectionism

The entry into force of an ambitious Indonesia-Australia trade deal on Sunday is a boost to the bilateral relationship, coming after nearly a decade of difficult negotiations. No two neighbouring G20 economies trade as little as Australia and Indonesia, and the investment relationship is similarly

Economic diplomacy: Diversification dilemmas

Costing the D word Diversification might be the word of the moment in the lexicon of Australian trade debate, even though few advocates make much attempt to explain how it will actually work. But now we have two interesting efforts to quantify just how selected reductions in trade with China in

Book Review: What’s holding China’s economy back?

Book Review: Dexter Roberts The Myth of Chinese Capitalism: The Worker, the Factory, and the Future of the World (St Martin’s Press, 2020) With the US, Brazil and many European countries struggling to manage the Covid-19 pandemic, China seems to be emerging as an even greater economic and

Australia-UK trade agreement: Good, boring policy

Australia and the UK kicked off free trade agreement negotiations on 17 June to speeches and video presentations so triumphant as to border on self-parody. Yet for all the pageantry and scorn, a trade deal between Australia and the UK is fundamentally a commonsense policy that warrants neither

The geopolitical consequences of a pandemic

The global system is in a state of flux. China’s renewed territorial assertions and growing military power continue to pose challenges to regional peace and stability. US-Russia relations have plummeted into a downward spiral. We have passed through a crisis on the Korean Peninsula that has had a

COVIDcast: World economy in flux

In this episode of COVIDcast, Lowy Institute lead economist Roland Rajah sat down with Adam Tooze to discuss how the Covid-19 economic crisis is evolving and reshaping the world economy. Tooze is Professor of History at Columbia University and the Director of its European Institute. He is also the

How is an advanced Australia faring in the Asian century?

China’s barley tariffs have thrust the challenges of trade into the headlines with a prominence rarely seen in the popular Australian media. Although a crucial basis of national prosperity, the “trade” side of Australia’s international engagement has seemingly always had a lower profile than

Economic diplomacy: Mood shift afoot

Retail therapyWhen even the normally unflappable Trade Minister Simon Birmingham bluntly tells business to reduce ties with the country that has underpinned the Australian economy for two decades, a mood shift is afoot. It took some prodding, but Birmingham finally broke cover at the end of his ABC&

The prospects for China’s post–Covid-19 economy

While the Canberra political establishment has been sparring with China’s Foreign Ministry – and with Australian billionaires – much of the corporate elite has begun puzzling how to slipstream China’s post–Covid-19 economic recovery. Optimists hope that Beijing will summon a massive

The high price of cheap oil for Saudi Arabia

The ramifications from the oil war that has pitted Saudi Arabia against Russia but also dragged in the United States may end up being most significant for Riyadh. To misquote Oscar Wilde, “To lose one war may be regarded as misfortune, to lose both looks like carelessness.” Having already

New Zealand: Running the marathon

Earlier this week, New Zealand moved out of total lockdown into a phase of continuing control on social movement, but with an opening of widespread economic activity. Schools reopened partially. It is estimated that about half a million people returned to work after a stand down of five weeks.

Missing in action: The G20 in the Covid crisis

As the Covid-19 pandemic deepens, the need for international cooperation to deal with the twin health and economic crises has been highlighted. While much is made of the failings of the World Health Organization, other international bodies have fared no better. In particular, the G20 – which

The complex consequences of a plunging oil price

Oil made headlines around the world again today, with US oil prices falling below zero for the first time. So what does it mean? Three perspectives can help to make sense of the headlines. First, from an economic perspective it’s quite simple – the supply of oil has outstripped demand and

We’re all socialists now

Of all the people who might have been expected to emerge from the current coronavirus crisis with their reputations enhanced, I don’t think many would have nominated Karl Marx. And yet when governments around the world are adopting unimaginably radical solutions to address yet another “crisis

After coronavirus: Where the world economy will stand

For all the drama of collapsing output, demand, and jobs in Australia and many economies around the globe, we should expect that output in most countries will begin to recover once new coronavirus infections peak and head down. It will not be soon, but it will happen. This is, after all, a

What the G20 needs to deliver

The Covid-19 outbreak has rapidly gone from a crisis for China to a crisis for the world. The pandemic is desperately crying out for international leadership. So far that has been sorely missing. An extraordinary (virtual) meeting of G20 leaders, to be held on Thursday, will hopefully begin

The IMF ponders international capital flows

The International Monetary Fund is like a priesthood, with long-established beliefs that evolve at a glacial pace. A new managing director presents a rare opportunity for reform. Can Kristalina Georgieva, appointed last October, change the Fund’s doctrinal beliefs? Writing in the Financial Times

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