Saturday 10 Dec 2016 | 20:19 | SYDNEY
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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.  

Unbundling globalisation

Brexit and Trump’s victory have caused a reassessment of economists’ rose-tinted vision of globalisation. Richard Baldwin’s The Great Convergence provides another perspective on what has happened and why it has not turned out to be as universally beneficial as was promised. Baldwin sees the

Why the TPP should be saved

Perhaps there is, as Ross Garnaut has argued, no silver lining to Donald Trump’s economics. But there may be a small silver lining to Trump’s rejection of the Trans Pacific Partnership (TPP) and his embrace of protectionist policies during the campaign. It depends if the response to these helps

Indonesia considers trade options post TPP

US President elect Donald Trump's confirmation he intends to pull out of the TPP has led to confusion and uncertainty across the region. For its part, Indonesia is still keen to sign on to the TPP but there are many factors to consider in the cost-benefit analysis on the topic the

Trump-sized upheaval in climate movement

The election of Donald Trump as the next president of the United States cast a long shadow over the climate conference in Morocco earlier this month. Delegates spent a lot of time expressing hopes that President-elect Trump was not serious when he declared climate change theory to be a 'hoax'

How US protectionism would threaten Australia

The impact of US President-elect Donald Trump's intended withdrawal from the Trans Pacific Partnership (TPP) on Australia could be seen as relatively benign, if one concentrated soley on trade in goods and services. After all, we have the Australia-United States FTA, concluded in 2004. The

Trump's voters will be disappointed by his economics

With all the campaign blather, posturing and hyperbole, we don’t know much about the specifics of President-elect Trump’s economic policy. One thing is clear: it is not possible to satisfy the inchoate economic expectations of those who elected him. Let’s focus on a couple of economic issues

APEC: Staggering past relevance

Even though it is the region’s second oldest multilateral mechanism, APEC continues to find relevance hard to come by. Best known for the photo taken at the annual leaders’ summit at which said leaders bond over the humiliation of donning often garish 'national attire', this grouping has never

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