Light amidst global gloom (2)

Following the global financial crisis, developed countries have tightened their financial monitoring, which has slowed down the development of their financial sectors and flow of international capital. In response, developing countries have become more cautious about opening up their financial markets to the outside world. These developments, to some extent, will have a negative impact on globalization and push the global economy toward a gloomier future.

From a short-term perspective, the global financial crisis will continue hampering global economic development. On one hand, the debt crises in some developed countries will have a direct impact on the global financial system and cripple their capability to take new financial and monetary measures to stimulate their economic recovery. On the other hand, a widespread loose monetary policy across the world has flooded the global economy with liquidity, exacerbating inflation worldwide, prompting emerging countries to tighten their fiscal policies and causing economic deceleration.

In the long run, the global financial crisis will not change the trajectory of global growth, although it has had a far-reaching impact on global economy. On average, the global economy is expected to maintain an annual growth rate of 2.9 percent over the next two decades, which is lower than the past two decades.

In developed countries, economic deceleration is likely to become more obvious over the next couple of decades, and the possibility of the United States, Japan, and European countries regaining the growth rate of the previous decades appears to be slim.

Developing countries, however, are expected to become an even greater driving force of global economic development over the next two decades because of their increased inputs into scientific and technological research and development. And most of the developing countries will continue enjoying their demographic dividends, including an endless supply of labor to boost their economic development, for some time to come.

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