Friday 22 Oct 2021 | 05:42 | 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.  

Financial stability: Did the G20 go far enough?

Financial stability was not the most headline-grabbing topic discussed at the Brisbane G20 meeting, but judging from the official communique word-count (a full 175-word paragraph in the three-page document, plus four substantial items in the annexes), a fair bit must have happened. Governor of

Beyond the Boom: A response to John Edwards

Senior economic policy makers, economic analysts, academics and commentators have been concerned about the daunting challenge of structural and budget adjustment facing Australia due to the decline in mineral prices from the levels reached in the boom period of 2003-04 to 2011-12. In Beyond the

Why economics doesn't explain China's FTA decision

Malcolm Cook and I have been debating why China has been willing to bless Tony Abbott with an FTA when Mr Abbott has so strongly opposed Beijing's political and strategic interests and aspirations in Asia. Why has President Xi met Mr Abbott's stick with such a juicy carrot, especially when

Fiji grabs the limelight as leaders of China and India visit

Jenny Hayward-Jones is Director of the Lowy Institute's Melanesia Program and Philippa Brant is a Research Associate at the Lowy Institute. Pacific Island leaders have had the rare opportunity to meet the international leader of the moment, Narendra Modi, and the president of the world's

China-Australia FTA: Let's calm down

Free trade agreements (FTAs) are back. After a lot of bureaucratic blood sweat and tears, Australia and China have signed a Declaration of Intent, and now both sides will prepare legal texts of the Agreement. This appears part of a broader pattern for China, which reportedly is becoming more

A G20 watcher in Brisbane

I am from Brisbane, and somewhat ironically, my original ticket out of this city was the G20 analysis I conducted while studying and working at the University of Queensland. In a serendipitous turn of events, Australia and my hometown city were announced as 2014 G20 hosts during that research, which

Weekend catch-up: A G20 special

With the Brisbane G20 Summit on this weekend, The Interpreter's usual weekend catch-up makes way for a 'best of' our G20 material from the past year. The Lowy Institute's G20 Studies Centre has been publishing on all aspects of the Summit, including what the presidency has meant for Australia, as

Beyond the Boom: A response to Jonathan Pincus

In a paper published recently on the Minerals Council of Australia website, Adelaide-based economist Jonathan Pincus takes issue with some of the calculations I make in my Lowy Institute Paper Beyond the Boom. He makes a number of criticisms, but the big one is of my estimate of the income gain from

Is the Global Infrastructure Hub more than a G20 legacy monument?

By Hugh Jorgensen, Research Associate and Tristram Sainsbury, Research Fellow, both at the Lowy Institute's G20 Studies Centre. Infrastructure has been a priority of the Australian G20 presidency, but we haven't seen much in terms of bricks and mortar proposals. Until now. Writing in The

China plans a global bullet-train dynasty

It is often observed in China that, the worse the economy, the more active the nation's railway building becomes. A flurry of new high speed rail (HSR) announcements, domestic and international, might suggest that policymakers are worried. Indicators like electricity, freight, steel and wholesale

Will the G20 address inequality at the Brisbane summit?

Of the 60-plus official meetings that have taken place under Australia's 2014 G20 presidency, a grand total of one has managed to produce a final communiqué or meeting report that mentions the word 'inequality'. To be fair, it does mention it twice: the 10-11 September declaration of G20 Labour and

Congress, midterms and the TPP

US mid-terms elections will take place on 4 November, with polls suggesting the Republicans will re-take control of the Senate. President Obama's next steps on the Trans Pacific Partnership (TPP), which his Administration says is the key economic plank of the rebalance to Asia, will be heavily

China's coal addiction

A recent paper in Nature says that 'no other country is investing so much money or generating so much renewable energy' as China. 'Its build-up of renewable energy systems at serious scale is driving cost reductions that will make them accessible to all.' The International Energy Agency reckons

Why Larry Summers might be wrong about China's growth

Forecasts of China's growth always attract interest, even when they are a year old. Larry Summers and Lant Prichett are getting another good run with the paper they published last year (see my earlier post), which analyses emerging-economy growth in general, but of China and India in particular

G20 Monitor: The G20’s growth agenda

This issue of the G20 Monitor provides a guide to the policies that G20 members will have to tackle to achieve the G20’s 2 per cent growth target, drawing on the recommendations of the IMF, OECD and a number of international think tanks

The WTO is in big trouble

The Director-General of the World Trade Organisation (WTO), Roberto Azevedo, says the institution has descended into 'paralysis'.  Director-General of the World Trade Organisation, Roberto Azevedo, Bali, 2013. Following the failure to get India to remove its objection to advancing the

Which countries are driving global growth?

Sometimes a picture is worth a thousand words. With the G20 focused on increasing economic growth, it's worth remembering where the global action is. The above graph from the IMF Multilateral Policy Issues Report, published in July, shows that the emerging economies have been doing the heavy

China wants a bigger piece of the smartphone business

The smartphone in your pocket embodies today's cutting-edge technology. It is also a product of a global supply chain decidedly old-school in the way it shares rewards. Two brands, Apple and Samsung, scoop over 100% of the profit pool (the other brands are losing money, giving them negative

Why the IMF's poor forecasting matters

Economic forecasting is the butt of jokes, but someone has to do it. You can't make sensible macro policy without some view of how the economy will travel. It's the IMF's thankless job to be the high-profile forecaster for the globe. The Fund's latest World Economic Outlook acknowledges its recent

IMF changes its tune on infrastructure

In its latest World Economic Outlook, the IMF has joined the chorus of international institutions (G20, OECD) calling for more infrastructure spending. What new elements does the Fund bring to this argument? Global growth has been disappointing. One reason is that governments have cut back on

Australian Customs: A bigger role to play in trade

In a new Lowy Institute Analysis launched today, Nicholas Humphries, the Australian Customs and Border Protection Service Fellow at the Lowy Institute, examines how Customs can increase Australia's trade competitiveness at a time when goods and services are increasingly produced across borders in

Indonesia's economy at a crossroads

With the passing of the presidential baton from Susilo Bambang Yudhoyono to Joko Widodo just a month away, Indonesia is at a political crossroad, with the first clear break from the politicians who were part of the Soeharto years. Monday's Indonesia mini-update at the Lowy Institute, a half-day

If Justin Lin is right, industrial carnage awaits

Justin Yifu Lin insists China can grow at 7-8% for another 20 years. A contrarian with a remarkable personal background, the former World Bank chief economist's views influence his country's top leaders and their sense of destiny. What he says matters. How, and how fast, China grows will be highly

The end of economic convergence? Not quite

Given that emerging economies continue to grow two or three times faster than advanced economies, the persistent gloom about their prospects is puzzling. The latest example comes from The Economist, which argues that convergence, the process by which poorer countries catch up to rich countries

State-owned enterprises: A strange fixation

Mike Callaghan is spot-on in arguing that Australia's foreign investment policy needs a wider reassessment than simply looking at limits on state-owned enterprises (SOEs). Let's try to take this a bit further. This fixation with SOEs is a peculiarly American priority seen also in the Trans-Pacific

G20 2014: Reform of the international organisations, financial regulation, trade, accountability and anti-corruption

This issue of the G20 Monitor discusses the reform of international economic institutions, financial regulation, and the trade, accountability and anti-corruption agendas at the forthcoming Brisbane G20 Summit. It also provides a summary of the key ideas from the ‘G20 Conference: Strengthening

Is the Fed acting as the world's central bank?

'The Federal Reserve enters its second century as the closest the world has to a global central bank.' So says Ted Truman, who speaks with some authority as he played a key advisory role for many years with the Fed (the US central bank) and the US Treasury.  However, Truman's detailed account of

2014 Australia-India Roundtable Report: Outcomes Statement and Summary Record of Proceedings

The relationship between Australia and India has reached a new maturity, based on deepening connections between their societies, economies, education sectors and policy establishments. This positions these two democracies to work together to advance their interests in a shared Indo-Pacific region.&

France, the sick man of Europe?

France is not doing well. The crisis is evident from the ubiquitous beggars in the streets of Paris to its bad, and worsening, economic data. President Hollande's wishful notion of a merely temporary French lapse in the economic competition with Germany has ended; defeat has been conceded.

A corrective to that robotics video

Earlier this week I posted a rather terrifying video about the implications of robotics for the global economy and employment. Thanks to Stephen Grenville for pointing me to this critique of the video. The piece has a couple of key arguments, the first refuting the notion that human workers will

Are we measuring international trade correctly?

Perhaps the most fundamental change in international trade in recent decades has been the development of multinational 'supply chains'. The production process has been 'unbundled', with different stages of production taking place in different countries. An iPad is assembled in China, but only $10 of

Australia's economic diplomacy: Enlightened self-interest?

Almost a year since the Coalition took the reins of government and introduced its policy of 'economic diplomacy', a term which was probably foreign to many Australians at the time, Foreign Minister Julie Bishop and Trade and Investment Minister Andrew Robb launched the Government's Economic

Humans need not apply: An economic horror movie

Holy crap, this video is terrifying. From the narration: We have been through economic revolutions before, but the robot revolution is different. Horses aren't unemployed now because they got lazy as a species; they're unemployable. There's little work a horse can do that do that pays for its

China: Economic war and the humbling of multinationals

'I really worry about China. I am not sure that in the end they want any of us to win', confided GE boss Jeff Immelt to a group of fellow multinational business-people dining in Shanghai in 2010. So far, GE has mostly stayed out of trouble in China. But many other Fortune 500 companies have been

What next for multilateral trade negotiations?

The Director-General of the World Trade Organization is sounding despondent after the latest setback to the December 2013 Bali Agreement. Meanwhile, a survey of exporters has given some endorsement for the alternative path of free trade agreements (FTAs). Is there any hope for furthering the

G20 must save the WTO, among other things...

As John Lennon wrote, 'life is what happens when you are busy making other plans.' How true for Australia's plans for the G20. Life is not being kind in the lead-up to the Brisbane G20 Summit. The head winds for the summit so far include: International organisations (the IMF and World Bank)

G20 2014: The G20 Brisbane Summit, inequality, energy and anti-corruption

The 12th edition of the G20 monitor contains an overview from John Lipsky on the G20’s role in global governance after the global financial crisis; a paper by Geoff Weir on the G20, Thomas Piketty, and inequality; thoughts from Hugh Jorgensen and Christian Downie on multilateral energy governance

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