by Xinhua writer Gao Wencheng
BEIJING, Dec. 16 (Xinhua) -- Haunted by trade tensions, a manufacturing downturn, and geopolitical uncertainty, 2019 is set to witness the weakest global economic expansion in a decade.
At this delicate juncture where the global economy remains fragile even though the financial crisis ended 10 years ago, more certainty - an anchor, if you will - is needed.
That is why the world economy will breathe a sigh of relief as the Chinese economy has remained resilient this year.
"SYNCHRONIZED SLOWDOWN" IN GLOBAL GROWTH
"The global economy is in a synchronized slowdown," said the International Monetary Fund (IMF) in its latest World Economic Outlook.
In the October outlook, the IMF further downgraded its expectations for world economic growth to 3 percent for 2019, the slowest pace since the global financial crisis. Growth for advanced economies is projected to slow to 1.7 percent in 2019, while emerging market and developing economies will experience growth of 3.9 percent this year.
"A notable feature of the sluggish growth in 2019 is the sharp and geographically broad-based slowdown in manufacturing and global trade," the Washington-based institution said.
U.S. gross domestic product (GDP) increased at a 2.1-percent annualized rate in the third quarter, marking a sharp deceleration from the 3.1 percent in the first quarter, with growth in consumer spending, which accounts for about 70 percent of U.S. economic activity, at a 2.9-percent rate, lower than the 4.6-percent growth pace in the second quarter.
The European Union's statistics office Eurostat estimated that eurozone growth was a meager 0.2 percent in the third quarter against the previous three months, the same as in the second quarter and lower than that of the first quarter.
Moreover, the European Commission has said that euro area GDP is forecast to expand by 1.1 percent in 2019, downgraded by 0.1 percentage points from its previous projections.
Japan's GDP grew an annualized 1.8 percent in July-September, the weakest growth seen this year as sales tax hike and weakening external demand are hanging over its economy.
Among emerging market and developing economies, India grew by 4.5 percent during July-September quarter, the slowest growth pace in six years. The European Bank for Reconstruction and Development predicted that the Russian economy will record growth of 1.1 percent in 2019.
South Africa's economy shrank by 0.6 percent in the third quarter with its yearly economic growth rate projected at just 0.5 percent. According to the UN's Economic Commission for Latin America and the Caribbean, the region's overall growth this year should be only 0.1 percent.
EASY MONETARY POLICY
Mounting uncertainty, combined with insufficient technological innovation, aging populations, and geopolitical disputes, have posed challenges to global economic expansion.
Among them, rising trade tensions initiated by protectionists and their impact on exports as well as industrial production took a major toll on the world economy.
According to the World Trade Organization (WTO), trade flows hit by new restrictions implemented by WTO members continued at a "historically high" level between mid-October 2018 and mid-May 2019, with the trade coverage of import-restrictive measures implemented during the review period estimated at 339.5 billion U.S. dollars.
The Geneva-based organization also said recently that world merchandise trade volumes are expected to rise by only 1.2 percent in 2019, substantially slower than the 2.6 percent growth forecast in April.
An economic outlook issued this year by the Organization for Economic Co-operation and Development identified trade tensions as the "principal factor weighing on the world economy."
It underlined that the cycle of trade disputes hurts manufacturing, disrupts global value chains and generates significant uncertainty.
Analysts said that behind the main challenges facing the world economy are the trade protectionist moves by certain countries and disruption to the rules-based multilateral trading system.
To dampen the headwinds from slowing global growth, numerous central banks, including the U.S. Federal Reserve and the European Central Bank, have announced interest cuts in an attempt to stimulate economies, some of which even adopted unconventional monetary measures such as negative interest rates.
Easy monetary policies across advanced and emerging economies may have helped avert a serious economic downturn in the short run, but challenges such as rising debt, inflated asset bubbles, and increased vulnerability of the financial system have also emerged.
Vitor Gaspar, director of the IMF Fiscal Affairs Department, advised policymakers to follow prudent fiscal policies, saying that the interest rates are negative in many advanced economies, and "further decreases in policy interest rates are limited."
CHINA'S ROLE IN PURSUIT OF CERTAINTY
China and the United States have agreed on the text of a phase one economic and trade agreement based on the principle of equality and mutual respect, according to a statement issued by the Chinese side on Friday.
As the global economy faces downward pressure, the agreement will boost confidence in the global market, stabilize market expectations, and create a favorable environment for normal economic, trade and investment activities, the statement said.
"Policymakers must undo the trade barriers put in place with durable agreements, rein in geopolitical tensions, and reduce domestic policy uncertainty," IMF Chief Economist Gita Gopinath has said.
"Such actions can help boost confidence and reinvigorate investment, manufacturing, and trade," Gopinath added.
In the October World Economic Outlook, the IMF projected a "modest improvement" in global growth to 3.4 percent in 2020, with 1.7 percent for advanced economies, and 4.6 percent for emerging market and developing economies.
Next year, emerging and developing economies are expected to act as the main engine of the world economy with China's role of a stabilizer and engine.
China's overall GDP growth reached 6.2 percent year-on-year in the first three quarters of this year, the fastest among major economies worldwide, according to official data.
"Facing significant external headwinds from trade protectionism in some major economies, China has maintained stable growth in 2019, with main economic indicators kept within an appropriate range," said Yi Gang, governor of the People's Bank of China.
Furthermore, Kiyoyuki Seguchi, research director at the Canon Institute for Global Studies, noticed the Chinese economic policies today are marked by a devotion to high-quality development rather than quantitative expansion.
As IMF Managing Director Kristalina Georgieva said, China has been a major growth engine for the world economy, and its economic health bears global significance.
