Emerging economies will gradually recover in 2020, which is expected to drive global recovery

category:Finance
 Emerging economies will gradually recover in 2020, which is expected to drive global recovery


At the same time, Brazils economic growth is expected to double to 2% - 2.5% in 2020, but researcher Yue Yunxia, director of the Economic Research Office of the Latin American Institute of the Chinese Academy of Social Sciences, told the first financial reporter that this is not a bright data. Brazils economy is still in a low ebb, and 2020 will be a slow rebound process.

In 2020, the economic growth rate of emerging markets and developing economies is expected to pick up. The picture shows Carnival in Rio, Brazil.

Emerging markets will gradually recover

The global economy is in a downturn in 2019. In October last year, the IMF predicted that the global real economic growth rate in 2019 would be 3.0%, the lowest level since the global economic crisis in 2008. However, in 2020, the economic growth rate of emerging economies is expected to pick up and lead the global economy to recover. It is expected that the global economic growth rate will rise slightly to 3.4% in 2020. The reason for the overall recovery of the growth rate of emerging economies is that the pressure of emerging markets such as Turkey, Argentina and Iran will gradually reduce, while the economies such as Brazil, Mexico, India, Russia and Saudi Arabia will start to recover slowly.

Indias economy is recovering from challenges

After a series of landslides in 2019, Indias economy will recover in 2020 as the global environment improves, several institutions said.

This coincides with the forecast in the OECD Economic Outlook for Southeast Asia, China and India released on December 2, 2019, which predicts that the average growth rate of Indian economy in 2020-2024 will be 6.6%, lower than the average growth rate of 7.4% in 2013-2017.

The OECD said in the report that Indias huge domestic consumption demand will support the sustained and rapid economic development, and urban and rural infrastructure will provide sufficient opportunities for domestic investment, which is very important to promote economic growth.

At the same time, the OECD said that promoting the continuous improvement of Indias banking industry is essential for Indias future development. Since September 2018, the non banking financial crisis in India has directly affected the sales of domestic cars and houses. In August 2019, the Central Bank of India had to restrict the withdrawal of depositors due to the outbreak of fund management problems in a cooperative bank in India.

In the world economic outlook, the IMF said that Indias economic growth weakened in 2019 because of uncertainty in corporate and environmental regulation and concerns about the soundness of the non bank financial sector, which had a negative impact on demand. For Indias economic growth rate in 2020, the IMF forecasts 7%, down 0.5% compared with the world economic outlook forecast in April 2019.

At present, the political situation in India is also becoming tense. On December 10 and 11, 2019, amendments to the Citizenship Act were passed in the lower and upper houses of the Indian parliament, triggering protests and riots across the country, which is regarded as the biggest challenge for prime minister modi since he came to power in 2014.

The current focus on the social agenda has come at the expense of the economic agenda. Akhil berry, a South Asia analyst at Eurasia Group, a risk consultancy, said the government has relied on the Central Bank of India to keep interest rates down to increase liquidity in the system, but so far it has not focused on major economic restructuring to reduce red tape and attract investment.

Lin minwang said that although its not easy to judge when the unrest will last, the passage of the bill has completely angered the relevant groups in India. After years of repression, there was a general outbreak, and the anger is burning, which will not be stopped for a short time.

Double Brazils GDP?

In its December 2019 report, the Brazilian central bank raised its forecast for GDP growth in 2020 from 2.08% to 2.18%. However, yueyunxiayan believes that as an emerging economy, this growth rate is not very satisfactory data.

2019 is the first year that Brazilian president bosonaro came to power. He implemented a more pro business and market-friendly economic policy. He has promoted a number of reforms, the most important of which is the pension reform bill, which is the core of the Brazilian governments reform, which came into force in November 2019 and aims to reduce the public financial burden of the Brazilian government and thus stimulate economic recovery. The implementation of the bill is expected to save up to R $800 billion for the Brazilian government in the future.

In addition, the investment partnership plan (PPI) has been further promoted and implemented in 2019. PPI is the economic development strategy implemented by the Brazilian government in response to the current weak economic development situation. At the same time, Brazils inflation has been controlled and interest rates have been cut to their lowest ever level. Yueyunxia believes that the above measures are conducive to Brazils economic bottom rebound.

Yue Yunxia told the first financial reporter that Brazils economic fundamentals are still in the process of recovery, and whether the reform can play the expected role remains to be further tested by the market.

In particular, she mentioned that in 2019, social unrest broke out in the whole South America, and Brazil is relatively stable at present. However, it remains to be seen whether the reform measures taken by bosonaro to break the hatchet will lead to a public backlash.

For Brazils economic recovery, yueyunxia said that the current external market conditions are not very favorable. In 2019, the impact of Brazils mining disaster and Australias Hurricane once made the iron ore price rise sharply, but with the recovery of supply and the contraction of demand, the iron ore price, which accounts for a large proportion of Brazils exports, fell from a high level.

In the ten years from 2011 to 2020, the average annual growth of Brazilian economy is only 0.9%. Yue Yunxia said that the Brazilian economy has been at the bottom of the valley for a long time, and can maintain a slow rebound in 2020, but it is difficult to call a bright recovery.

Source: First Financial Editor: Guo Chenqi, nbj9931