Economy

As global trade continues to face waves of uncertainty amidst the pandemic and ongoing geopolitical tensions, not least the unresolved trade war between the United States and China, the future of EU-Asia relations is going to be heavily impacted by the most recent development in the Asia-Pacific. The Regional Comprehensive Economic Partnership (RCEP) signed last November is a symbol of a pan-Asian trade network, inspired by the belief that greater market openness will lead to greater economic prosperity.

The pandemic has cast a severe negative influence on the world economy. The Global Economic Outlook Report released by the Organization for Economic Cooperation and Development (OECD) shows that global GDP fell by 4.2% in 2020, which means that the total global economy dropped from $87.75 trillion in 2019 to $84.07 trillion in 2020, shrinking by $3.68 trillion.

2020 was a terrible year for Asia but for some less than for others. A number of countries managed to grow positively despite  the pandemic, with Mainland China as the most obvious example but not the only one. Taiwan grew above potential and Vietnam grew positively. The rest of Asia really had a hard time, especially India as well as Indonesia and the Philippines, due to the much wider spread of the pandemic and the limited fiscal and monetary space.

Tourism activity represents a considerable part of the economy in Italy, Spain, Portugal, and Greece.The sector accounts for between 6% and 8% of these countries’ GDP directly and for further 8% to 13% indirectly, representing a major component of services exports.

Political transitions are difficult, but economic transitions are even harder. Ten years after the uprisings that ousted long-established political regimes in the Middle East and North Africa, the social grievances and structural economic weaknesses that sparked the protests all over the region remain largely unaddressed. With its sluggish growth and high unemployment, Tunisia is no exception.

National and European policymakers have put together an exceptional fiscal response to the coronavirus crisis. The Next Generation EU (NGEU) fund, together with a reinforced European budget (MFF) for 2021-2027, should be one of the main tools to shape and boost the bloc’s recovery. In particular, the establishment of the Recovery and Resilience Facility within the NGEU is a major step in this direction.

Figure 1: How the NGEU spreads its grants around

Despite the unresolved territorial dispute and emerging challenges between the two Asian powers, Sino-Indian economic ties have witnessed significant expansion over the three decades since Indian Prime Minister Rajiv Gandhi’s historic visit to China in 1988.

How do we transition from the dominant status quo, an extractive political economy, towards a regenerative, circular system?

The 2020 GDP growth in Africa will be overwhelmingly negative for most countries. Blame that on COVID-19.