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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.  

Twenty years of BRICS

It is 20 years since Goldman Sachs chief economist Jim O’Neill invented the BRIC economic grouping – Brazil, Russia, India and China – with South Africa added later to make up the BRICS. He celebrated this anniversary with a self-congratulatory article in the Financial Times, expressing his

Economic diplomacy: Free trade vs economic resilience

Santa clauses The value of global goods trade during the biggest pandemic in a century last year dropped about a third less than it did during the biggest financial crisis in a generation in 2008. But internet searches about “economic resilience” are running more than twice as high these days

Time to step up on global kleptocracy

When the Pandora Papers were published last month, few registered their significance for Australian statecraft. Spanning 11.9 million leaked documents, and exposing the property empires and shell companies of kings, presidents and celebrities, the revelations generated scandals and condemnation. But

China’s digital currency: Next stop, Africa?

In April 2020, China was the first major economy to pilot a digital currency, the e-yuan or e-CNY. The e-CNY, which will eventually replace physical cash and is currently being tested in Chinese cities, is integrated with the Digital Currency Electronic Payment (DCEP) system and data processing

Framing globalisation

  Six Faces of Globalization: Who Wins, Who Loses, and Why it Matters, by Anthea Roberts and Nicolas Lamp (Harvard University Press, 2021) People use mental shortcuts to organise their thinking about complex issues, but because the same situation can be presented in different ways,

China’s economic sanctions made Australia more confident

China has singled out several Australian industries with economic sanctions since May last year, imposing hefty tariffs on Australian barley and wine exports, while throwing up barriers to other products including timber, lobster and coal. Beijing’s action has largely been seen as a response to

India’s AI conundrum

Late last month, people across the globe gathered online for the second Annual Artificial Intelligence for Information Accessibility Conference (AI4IA), organised by UNESCO. Fittingly for an AI conference, it was hosted on the Gather.Town platform, which allows for virtual customisable spaces to be

WTO dispute settlement: why Australia bothers

I have three propositions about Australia’s participation in World Trade Organisation dispute settlement to put to Interpreter readers. Proposition one: the WTO dispute settlement system has never been of more relevance to AustraliaAustralia has been relatively restrained in its use of the system

Australia’s real leverage in China’s CPTTP bid

When China applied earlier this month to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the renamed 11-nation trade pact spanning Asia and the Pacific, Beijing seemed to hand Australia the rare diplomatic gift of leverage. Australia, like other existing members of

Economic diplomacy: After AUKUS in trade, aid and technology

Waiting line China is now the top export and import partner for 12 of the other 20 members of the Asia-Pacific Economic Cooperation (APEC) group and a top one-way partner for five others. The US score on this measuring stick is two and one. This is one very basic way of seeing how China’s bid

Can the China model be accommodated in the CPTPP?

On 16 September, China officially applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) comprising Australia and 10 other members. The free-trade pact is the most extensive in the region, and accounts for almost 14 per cent of global GDP. Before pulling

Beyond Fortress Australia

The reality of living in a pandemic has dawned on Australia. Covid cases at the time of writing are high and still climbing. The virus is here to stay. Equally clear is that ring-fencing the country from the world — the ‘Fortress Australia’ policy — is no longer viable

Iran’s energy diplomacy

Much is made of Iran’s use of proxy or allied groups to exert “hard power” influence throughout the Middle East where Tehran believes its interests are under threat (Lebanon), or sees an opportunity to exert greater influence (Syria, Iraq), or to act as a spoiler (Yemen). But far less is made

The right climate for Indonesia-United States cooperation

Indonesia is feeling a little ignored. The recent visit by US Vice President Kamal Harris to Vietnam and Singapore led to speculation that Indonesia was not a priority for the Biden administration. “Snubbed again, Joe?” read one local headline. A few weeks beforehand, US Defence Secretary Lloyd

Candour, at last, on China – but then what?

The most important foreign policy speech by a cabinet minister so far this year was delivered last Monday. That Treasurer Josh Frydenberg was the speaker was a little surprising. A little less surprising was that he identified an ascendant, muscular China as a first order threat to the country’s

Economic diplomacy: Australia Inc’s new world order

Risky business Australia’s sovereign wealth fund – the Future Fund – was established 15 years ago when the rivers of gold from selling iron ore to China were just starting to flow and country was only about half-way through its record-setting 28 years of economic growth. The Future Fund’s

China’s digital currency takes shape

China’s financial system is changing. The country’s new Digital Currency Electronic Payment (DCEP) – a digital payment and processing network run by the Central Bank of China – and its digital currency, the digital yuan (e-CNY), is expected to completely replace physical cash. Unveiled

Did 9/11 change our world?

We asked six experts, “Did 9/11 define our world? If so, how? If not, what did?” After each of their responses to these questions, editor Lydia Khalil challenges the experts with questions that delve deeper into their rationales and reasons

Economic diplomacy: After Kabul, Australia looks to India

Suitcase intelligence Bob Carr recalls in his Diary of a Foreign Minister how a senior Australian intelligence official told him bluntly in 2013 that the war against the Taliban was failing. “We spent a billion dollars in Uruzgan province … We could have achieved the same result if I had been

China puts its golden goose on notice

In recent years, China’s digital economy has seemed like a house undergoing full-scale renovation. At this moment, it appears to be in the demolition stage. In a series of regulatory smackdowns, the magnitude ranging from sledgehammers to wrecking balls, Beijing has appeared willing to lay waste

Economic diplomacy: Burning down the house

Follow the money Forget Extinction Rebellion, carbon border adjustment mechanisms and doctors’ wives in inner city Liberal seats. When Prime Minister Scott Morrison locked onto the existential message in this week’s United Nations climate change report it seems to have been about how foreign

Australia and India: A time to refocus on trade talks

Australia’s former Prime Minister Tony Abbott has just completed a packed visit to India from 2–6 August as Prime Minister Scott Morrison’s special trade envoy. Abbott should have reason to be encouraged by his interactions and his meetings with a cross section of decision-makers in India,

Economic diplomacy: Going for gold in 20 years and counting

Silver medal winner Prime Minister Scott Morrison last week became the latest national leader to bank the immediate short-term political benefits from the projected long-term economic and soft power value of hosting the Olympic Games. Morrison declared after Brisbane won a competition against no

When the chips are down: Biden’s semiconductor war

Export control policy in the semiconductor sector – an industry that supplies the world’s computer, smartphone, appliances and medical equipment industry with electronic chips – was at the forefront of Donald Trump’s tech war against China. The addition of China’s top chipmakers, such as

China’s numbers game harms us all

Speaking before a crowd at Tiananmen Square that gathered in celebration of the 100th anniversary of the Chinese Communist Party (CCP), Xi Jinping triumphantly declared that the goal of building China into a “moderately prosperous” society had been completed. Though without a clear measurable

The G20 “diplomacy dividend”

The last 18 months have been trying times for the Group of 20 (G20). The Covid world continues to challenge the effectiveness of multilateralism – the practicalities as well as the policy issues. While the government-to-government track of the G20 appears held together by a hybrid of in-person and

EU the new kingpin in global trade order

Under President Donald Trump, the United States launched an assault on the rules-based multilateral trading system, repeatedly threatening to withdraw from the World Trade Organisation (WTO), sabotaging its enforcement mechanism and blatantly violating its rules by arbitrarily imposing tariffs on

OPEC Standoff: Resetting market share

The 1 July OPEC meeting ended in deadlock. Although all the major oil producers agreed in principle to collectively boost production by 400,000 barrels per month from August through the end of 2021, they failed to agree on how long the production agreement should last, putting the whole deal on hold

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