Wednesday 26 Jan 2022 | 21:59 | SYDNEY
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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.  

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

Australia sweeps the table in the UK trade deal

Australian trade negotiators often enter talks with difficult demands and a comparatively weak hand. Agriculture, where they seek concessions from the other side, is politically sensitive meaning they are asking their counterparts to do what is hard. In exchange, they have little to offer because

The battle for Africa

In his first overseas trip as US President, Joe Biden has flagged he intends to rally European allies in a critical “battle between democracies and autocracies”, and “make it clear to Putin and to China that Europe and the United States are tight”. Biden is not the only one in

Economic diplomacy: Trade deals for a fast-growing family

Worker vs worker vs student Almost five million Kiwis have always been at least cousins. And Scott Morrison’s distinctive contribution to regional security has been his embrace of about 10 million other islanders as “our Pacific family”. But in a week of rhetoric about international

New push for WTO trade reform

With the World Trade Organisation (WTO) Doha Round of negotiations stalled nearly 20 years after its launch, it takes an optimist to see the prospect of the multilateral rules-based trading system being brought back from the brink. Dramatic shifts in geopolitical and economic weight across the WTO

Patent waiver for vaccines is a plus, but no panacea

The United States has thrown its support behind demands from developing countries to temporarily waive intellectual property (IP) rights for Covid-19 vaccines. Other rich countries, including Australia, that are yet to change their position at the World Trade Organisation should also do so with the

London and Hong Kong: Financial centres in parallel peril

There is a curious parallel between Hong Kong and London as financial centres in potential decline due to the recent loss of a unique position. Historically both cities were crucial nodes in the global network of the British Empire. More recently both functioned at a critical junction between the

China’s innovation dilemma

It has long been conventional wisdom that China would struggle to become an innovative nation. China’s controlled society, with lack of freedom of speech and expression, propaganda and censorship, together with an education system that emphasises rote learning and memorisation have been judged to

Economic diplomacy: Patent politics and trade deal twists

Biden’s jab First it was new carbon emission cuts, and then a global minimum corporate tax. But it is hard to beat the Biden administration’s move to shaft the pharmaceutical industry lobby over vaccine patents for putting the US back at the heart of global public policy. The devil will be in

Australia keeps calm while China carries on

Now that the Morrison government has cancelled Victoria’s Belt and Road agreement with China, Australia is bracing for retaliation from Beijing, probably by way of further trade sanctions. When that retaliation arrives, what should Australia do about it? There’s an old saying that “living

Taiwan: Renewing a southbound vision

For all the talk of cross-Strait military tensions – which are real – in the economic realm, Taiwan’s fortunes have been bound to those of China. Recognising the need to diversify, when Tsai Ing-wen was elected in 2016, she initiated what was dubbed a “New Southbound Policy”, with the

Has China given up on state-owned enterprise reform?

Outside observers have all but given up hope that China will engage in meaningful state-owned enterprise (SOE) reform. There is a pervasive sense that rather than shrinking SOEs, China’s leaders are committed to increasing their prominence within the economy. Foreign perceptions of Chinese SOEs

Covid recovery, in Australia and the world

In much of the world, Covid-19 infections continue apace, but the global economy is rapidly recovering from last year’s slump. World trade volumes and industrial production were both higher in January than they have ever been, according to data collected by the Netherlands central bank. Releasing

The big bark but small bite of China’s trade coercion

Beginning last May, China has hit Australia with a barrage of trade sanctions in a fairly overt attempt at economic coercion. It’s still early days, but it’s worth taking stock of what the economic impact has been so far. The fact that China’s trade sanctions have taken place

Food security and Covid-19: Recognising women’s leadership

“Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life” – this recognition was a central focus of the 1996 World Food Summit. Today, Covid-

Why Aussie exporters won’t be toasting China or the US

Lock the doors When the China trade numbers were released on Tuesday, you could hardly blame Australia’s 2500 winemakers if they locked themselves in the cellar with a nice bottle of red. They certainly have plenty to drink. Only three months ago, Chinese customers drank 50% of Australian red

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