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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.  

Foreign-investment anxiety revealed in Lowy Poll

I've just written on the widespread antipathy in Indonesia to foreign investment, and how it is colouring the presidential election campaign. I attributed this hostility to the historical experience of colonialism. Now the Lowy Institute's annual poll reminds us that a similar (if less pronounced

How to manage economic nationalism in Indonesia

Both Indonesian presidential candidates have taken a strongly nationalistic stance on foreign investment in their pre-election campaigning. When one of them takes office in October, will they be 'mugged by reality' and soften their stance? If not, how much does it matter? When Indonesia achieved

A parallel Chinese financial order

The Financial Times ran a front page piece last Monday claiming that China has ordered a ban on state-owned companies using Western management consulting companies. It is alleged by senior Chinese sources that 'foreigners use their consulting companies to find out everything they want about our

Why are economists such poor forecasters?

Tim Harford on the astonishingly poor record of economists in forecasting recessions: The kind of institutional chief economist whose pronouncement makes it into Consensus Forecasts will stick to the middle of the road. Most countries, most of the time, are not in recession, so a safe strategy is

Lopsided economic growth in the Philippines

As one of the fastest growing economies in Asia, the Philippines formalised its new status as the toast of the town among global investors by hosting (on  21-23 May) the prestigious World Economic Forum on East Asia, which brought together leading businessmen, policy makers, and scholars from

Women in finance (or: Why is there no Lehman Sisters?)

 [youtube:fwIO4zbJt10#t=2229] As I mentioned previously, I was in the US last week to attend the Council of Councils conference in New York. Council of Councils is an initiative of the Council on Foreign Relations, and brings together 24 foreign policy think tanks from around the world around the

The demise of the Australia Network

May should have been a milestone month for Australian international broadcasting, and arguably the most celebratory in the 13-year history of the Australia Network. ABC executives were due to sign a prized deal with the Shanghai Media Group, giving the ABC the most extensive access to Chinese

Falafelnomics: Purchasing power in the Middle East

From Forbes: The Big Mac Index – now a golden standard for measuring purchasing power– doesn’t quite size up the region’s economic situation.  This index determines the purchasing power of different currencies by comparing the prices of McDonald’s signature hamburger in various

The China-Vietnam standoff: Three key factors

So, another maritime incident between China and one of its neighbours. There are reports from officials in Hanoi that Chinese and Vietnamese vessels collided on at least two separate occasions in the South China Sea on Sunday, in waters 120nm off the Vietnamese coast. The dispute began last

China's economy is #1, so now what?

So China officially becomes #1 in purchasing power parity (PPP) output and that is indeed a BFD. But there is both less and more here than meets the headline, and that's what's interesting. It's obvious that China surpassed the US several years ago in sheer volume terms, as revealed by PPP

The other income-equality debate

Rock-star economist Thomas Piketty is getting headlines for his book on income distribution,  mainly focused on disparities within advanced economies. This might be the moment to ride the wave of attention and record something of the long-running parallel narrative on emerging economies. If

China to overtake US as world's biggest economy this year

So reports the FT. Now, Interpreter readers have been hearing about China's rise for years, so they might be a bit jaded to such news. But try to shake off your lethargy and breath in the history of these 13 words from the FT's report: The US has been the global leader since overtaking the UK

Economic reform: Can China escape its contradictions?

China has made progress implementing the reform agenda of last November's Third Plenum. Private and foreign investors, especially those in Hong Kong, find themselves at the crux of Beijing's plans for markets to play a 'decisive' role in its statist economy. Two recent reforms are potentially

Movie trailer: Godzilla

A new trailer for the Godzilla reboot has just emerged, and it looks pretty awesome: Judging by the trailer, environmentalists should be ecstatic with this one. In fact, maybe James Cameron and his Hollywood actor pals could have saved themselves the effort of making a worthy documentary about

Inequality in Hong Kong: The divorce factor

Hong Kong is famously unequal. The measured Gini coefficient is among the world's highest. It is praised for 'economic freedom' yet also criticised for 'crony capitalism.'  It's well known in political science that, worldwide, folks care less about wealth inequality per se than lack of opportunity

IPCC and clean energy: Easy on the optimism

The latest Intergovernmental Panel on Climate Change report makes for gloomy reading. The world needs 'drastic changes' to reduce carbon emissions and prevent global temperature rises, reports the ABC; investment in renewable energy needs to triple, says the BBC; the emissions problem is

Think20 2014: Progress report on Australia’s G20 presidency

Leading analysts from influential think tanks from 11 countries across the world provide their interim assessment of the Australian G20 presidency in this report. They all participated in last year’s Think20 meeting in Sydney, organised by the Lowy Institute, and are now discussing whether

The three arrows of Abenomics: A report card

Today the Japanese value-added tax (VAT: what Australians call the GST) rises from 5% to 8%. This seemingly mundane event is a key part of the 'Abenomics' program, the effort to shake Japan out of its decades-long economic lethargy. So how does Abenomics look after 15 months? Exhibit 1 is the

G20: BRICS muscle up over Russia

The good news is that the odds are clearly in favour of the Brisbane G20 Summit going ahead: Sportsbet is offering $1.05 that the Summit will be held and $8.00 that it won't. The bad news is the fact that odds are being offered at all, even if they are long. The question mark that has arisen over

Two recent reports on poverty

First, the Chronic Poverty Report 2014-15, produced by the Chronic Poverty Advisory Network and published by ODI. The report focuses on the policies needed to get to zero extreme poverty. It argues that this is a tripartite challenge: to get close to zero, 'countries need to tackle chronic

Why China is unlikely to have a 'Lehman moment'

Financial markets are worried about the Chinese financial sector, with some even talking about the possibility of a 'Lehman moment', which would set off a major financial meltdown, as occurred in America in 2008. This would be very serious not just for China but for the global economy. China still

G20 2014: perspectives from business, civil society, labour, think tanks and youth

G20 engagement partners from Business (B20), Civil Society (C20), Labour (L20), Think Tanks (T20) and Youth (Y20) have each provided a contribution for this issue of the Monitor. Each address how the groups are organising their contribution to the G20 process in 2014, their priorities for the

Is the IMF a political football in the Ukraine crisis?

The way they were. Yanukovich and Strauss Kahn in 2010. Ukraine faces an economic crisis as well as a political one. Its economy is a mess and it will take a lot of money and time to put it on a sustainable growth path. It may not have enough of either. Caught in the middle is the IMF. The

A union with New Zealand for a larger Australia?

There are various possibilities for a Larger Australia. Michael Fullilove's path is to put more of our national resources into defence and diplomacy, as well as growing our population through increased migration and fertility, creating an Australia which walks taller on the world stage. A very

Mekong: Laos confirms Don Sahong dam plans

The Lao Government confirmed on Wednesday its intention to go ahead with construction of the controversial Don Sahong dam, commencing in December. Lao government ministers said that all of their actions in doing so would be presented in a transparent fashion. As I reported in The Interpreter on

Australia-China trade: Beijing means business

History shows that social unrest and political upheaval have one of two elemental causes: either empty stomachs or full stomachs. Hungry people are angry people, while a well-fed middle class looks beyond basic needs to metaphysical desires, like having a say in government. The central security

Richard Rosecrance on the West's resurgence (part 2)

SR: Given the many political, social, environmental and economic problems China faces, which you list in your previous answer (see Richard Rosecrance interview Part 1), what is the imperative for the grand coalition between the US, Europe and Japan that you argue for in your book? Why is it

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