Saturday 24 Jun 2017 | 17:42 | SYDNEY
What's happening on

Global Economy

Overview

Measured in US dollars, annual global gross domestic product is now somewhere over $72 trillion.  This figure incorporates all of the output in terms of goods and services within states, and also between states.  The global trading system represents around US$22 trillion of economic activity. Outside of the ‘real economy’, global financial asset markets are now worth well over US$600 trillion.   For perspective, Australia’s gross domestic product is worth around US$1.5 trillion.

What the Lowy Institute does

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 for International Policy.

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.

The International Economy Program regularly produces analysis on the major components of the world economy, principally in the areas of trade, finance, macroeconomic policy, and global economic governance.  The G20 Studies Centre, established at the end of 2012, places a particular focus on the role of the G20 as the primary global economic governance response to the global financial crisis.

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.  

Greek debt: kicked down the road yet again

It is almost eight years since the Greek debt crisis began. Now, with Greek GDP 25% lower than at the start of the crisis and nearly one quarter of the work force unemployed, the European creditor countries have once again failed to reschedule the debt in a way that would be sustainable and allow

Beware the infrastructure debt trap

Much has been written about the massive infrastructure investments needed to sustain Asia’s growth performance. The Asian Development Bank estimates that the region’s infrastructure will require investments of $US26 trillion by 2030, or $1.7 trillion annually, more than double its estimate less

No consensus on the Washington Consensus

Sam Roggeveen's discussion with Allan Gyngell is a reminder that the Washington Consensus means different things to different people. Let's try to sort out the diverse interpretations. As originally formulated by John Williamson, there were 10 principles which, he believed, would find widespread

Is the US economy at full employment?

After the painfully slow recovery from the 2008 great Recession, US unemployment is now 4.4%, well below the level commonly regarded as 'full employment'. This would suggest that the economy has reached capacity, with some arguing that the current lacklustre rate of growth is in fact 

TPP: With one down, can 11 stand?

Reports of the death of the Trans Pacific Partnership (TPP) were exaggerated – or at least premature. Move over a TPP of 12 nations (TPP12) and make way for TPP11, the lower number reflecting the withdrawal of the US from the agreement. When President Trump withdrew the US from the TPP in

No, wait! Globalisation makes a comeback

The hilltop Sicilian town of Taormina is best known for its medieval buildings, the ruin of an immense Roman theatre, a disturbing view of Mount Etna smoking nearby, and a pasta sauce made with eggplant. In recent weeks the tourist town has also been cluttered by bored, heavily armed carabinieri as

Capital flows to emerging economies: Still unresolved

This year marks the 20th anniversary of the Asian Financial Crisis. Many factors were involved in that disaster, but grossly excessive foreign capital inflows were the key macro-economic problem during the boom years preceding the crisis. These flooded out when 'euphoria turned to panic without

Pages