The global economic performance presents four major characteristics

The performance of the world economy presents four major characteristics.

Firstly, the economic growth rate is slow and uneven. The International Monetary Fund predicts that the global economy will grow at an annual rate of around 3% in the coming years, which is lower than the average annual growth rate of 3.8% in the past two decades. The world economic growth rate is expected to remain basically the same as last year in the next two years, which is called 'mediocre'. The imbalance is also very obvious. On the one hand, the growth of developed economies tends to stabilize, but the growth rate continues to be slower than that of emerging markets and developing countries. However, the speed at which developing countries catch up with developed economies is slowing down. On the other hand, there is a significant difference in performance between emerging markets and developing countries.

Secondly, the global trade outlook has improved, but the long-term trend is still not optimistic. In the past few decades, the growth rate of global trade has usually been higher than the economic growth rate. However, in recent years, global trade growth has been sluggish due to the slowdown in economic growth, the escalation of trade protectionism, and the impact of economic fragmentation. IMF analysis shows that the global trade volume of goods and services will only grow by 0.8% in 2023, far below the growth rate of the global economy. In 2024 and 2025, the growth of global trade is expected to rebound to the global economic growth rate of around 3%, but it will still be subject to factors such as trade restrictions and geopolitical conflicts.

Thirdly, from the perspective of monetary policy, market interest rates in developed economies have begun to decline, but will still remain higher than pre pandemic levels. The Bank of Canada, the European Central Bank, and the Bank of England have all initiated interest rate cuts, with the Federal Reserve expected to begin cutting rates in September. However, in the medium to long term, short-term interest rates in the United States may remain between 3.0% and 3.5%, and medium to long-term interest rates may remain around 4%, making it difficult to return to low levels. The Bank of Japan announced a rate hike on July 31st. The interest rate changes of major developed economies' central banks will bring uncertainty to capital flows and exchange rate fluctuations in emerging market countries.

Fourthly, from the performance of the world's largest economy, the United States, although its growth has stabilized, the problem remains severe. One possibility is that inflation may not fall below the Federal Reserve's target level of 2%, forcing interest rates to remain at a higher level. Secondly, the Federal Reserve's slow interest rate cuts have affected economic growth, and the recent sharp fluctuations in the stock market also reflect this concern in the market. Thirdly, the government's debt is heavy and constantly rising, resulting in long-term interest rates remaining at a relatively high level. Fourthly, trade protectionism continues to strengthen, weakening its economic competitiveness. Fifth, income inequality has further worsened and social cohesion has continued to decline.