Saturday 15 Dec 2018 | 23:22 | SYDNEY
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Global Economy

The ebbs and flows of global economic conditions, trade and capital flows, thus have substantial implications for the Australian economy, and Australia’s major regional trading partners. Understanding the broad trends, and identifying emerging challenges and opportunities within the global economy, is central to the work of the International Economy Program at the Lowy Institute.

The highly integrated nature of the modern global economy became especially evident during the 2008 global financial crisis. What began as a localised problem within the residential asset-backed securities market in the United States, eventually brought down major financial firms across the Western world, and ultimately pushed the United States and Europe into a deep and prolonged recession. Although global economic growth has recovered somewhat since 2008, it is still much lower than pre-2008 trends, and the hangover from the crisis has manifested itself in the form of high unemployment levels throughout much of the developed and developing world, as well as an increasing level of inequality both within and between countries.

Understanding the economic rise of Asia, and particularly of the growing middle class within Asia, is also crucial to the broader work of the Lowy Institute. Political economy analysis on major players in the region, chiefly China, India and Indonesia, features heavily in the work of the East Asia Program and the International Security Program.  

Is China ready for global leadership?

Is China ready for a larger global role and should the outside world, in particular a regional partner like Australia, embrace this possibility? Evidently not, judging by remarks made by the Secretary of the Prime Minister's Department, Michael Thawley. 'China wasn't ready to take on the

Iran has made big nuclear concessions in Vienna

Another seven days to reach an agreement; that's what the P5-1 decided this week when they weren't able to meet their 30 June deadline for a final deal on Iran's nuclear program. While some differences remain, both sides have come too far to walk away. The potential agreement achieves Western

Peak box? Global container trade is slackening

In a little-noticed interview, the chief of Panama's Canal Authority concedes that 'the world and the canal were unlikely to ever again see the booming container trade that characterised the 1990s and early 2000s' due to shifting manufacturing patterns and American thrift. Obviously, he has

Beijing should hasten slowly on AIIB

The establishment of the Asian Infrastructure Investment Bank (AIIB) reached another milestone on Monday when 50 of the 57 founding members signed the AIIB's Articles of Agreement. Seven countries are still sorting out domestic requirements before signing. China's Finance Minister Jiwei Lou and

China makes its formal climate-change pledge

China's long-anticipated formal pledge to international climate change negotiations, it's 'intended nationally determined contribution' or INDC, has arrived. China's target is a 60% to 65% reduction in the emissions-intensity of the economy by 2030 pegged at 2005 levels, with carbon dioxide

IMF belatedly rethinks austerity

When we get enough perspective to write a balanced history of the 2008 global financial crisis and the subsequent feeble recovery, fiscal policy mistakes will surely feature largely in the narrative. In the form of a new IMF paper, we are beginning to see that history taking shape, and with it a

BRICS New Development Bank moves ahead quietly

While Beijing's Asian Infrastructure Investment Bank (AIIB) has won overwhelming support (to the surprise of many, including China itself), another bank headquartered in China seems to be flying under the world's radar. Few people have heard of the BRICS New Development Bank (NDB). This was the

Five points that get lost about the Greek debt crisis

  Rather than focus on the blow-by-blow developments of the umpteenth meeting in the Greek crisis, here are some higher level issues that often get lost in the summitry din: At the moment, the parties are negotiating over a disbursement of €7.2 billion. This is the last €7.2 billion to be

MRC bows out of Don Sahong discussions

There has been little news of the much criticised proposed dam at Don Sahong in the far south of Laos since the beginning of the year, when the Mekong River Commission (MRC) arranged for a series of public meetings to be held in member countries to discuss the dam. From the start, these meetings

Liberalism, China and the internet

'It's not that laws aren't relevant' said MIT Media Lab co-founder Nicholas Negroponte during the 1990s, 'it's that the nation-state is not relevant...The internet cannot be regulated.'   Negroponte's assessment has not aged well, but to be fair, he was not alone in his belief. Digital activist

The road to Paris: Ten days and counting

The latest round of negotiations for the UN's Framework Convention on Climate Change closed in Bonn last Friday with mixed results. With ten formal negotiating days left until crucial climate negotiations resume in Paris later this year, the clock is ticking. Bonn Climate Change Conference, 1 June

Indonesia under SBY: Stability, stagnation, or both?

'What's in a name?' Shakespeare's Juliet asks. Quite a lot, as things turned out for her. And so it is for the just-published proceedings of the ANU Indonesian Update, titled The Yudhoyono Presidency: Indonesia's Decade of Stability and Stagnation. A 'mini' version of the Update was held at the

Still debating inequality, 40 years on

Thomas Piketty's Capital in the Twenty-first Century put inequality centre-stage in the economic debate. But the topic has been around for a long while. Brookings has recently republished Arthur Okun's 40 year-old Equality and Efficiency: The Big Trade-off, The launch was an opportunity to bring

Asian economies still growing

Despite gloomy talk about slowing economic growth, Asia has continued to grow strongly, and the IMF has forecast this will continue this year and next. Asia is still by far the most dynamic region in the world, accounting for 40% of world GDP but nearly two-thirds of global growth. Look, too,

China-Russia: An uneasy friendship

The China-Russia relationship is the world's most important, and the best between any two great powers, Xi Jinping told Vladimir Putin a couple of years ago. Last week, at the Kremlin's V-Day celebration, their ties were reaffirmed in grand style. Some observers dismiss the partnership as an '

China's dangerous cyberwar strategy

There's an 'Uber for X', goes the little ditty, celebrating the ubiquitous infiltration of the online 'sharing economy.' It seems Uber's business model can be turned to virtually all our needs, and a global ecosystem of app buttons has popped up on our smartphones. As in so many things, however,

Australia's Pacific aid budget spared from serious cuts

By Jenny Hayward-Jones, Director of the Lowy Institute's Melanesia Program, and Phillipa Brant, Research Associate. The Pacific Islands region has been spared any serious impact from cuts to the Australian aid program revealed in budget documents released yesterday. Australia's bilateral program

Jokowi hoping for good news from Papua

President Jokowi lifted an effective ban on foreign journalists reporting from Papua during his visit to the province over the weekend. Aside from being a positive step for press freedom, the move has been interpreted as an effort by Jokowi to boost his own image as a human rights defender and to

What the G20 can do about infrastructure

Infrastructure is now a standard item on the G20 agenda. Serious infrastructure shortages are ubiquitous. With global economic growth slow, ample construction capacity and interest rates at historic lows, there seems to be an opportunity to address the infrastructure gap. But many governments see

Is the G20 getting serious about climate change?

The G20 does not have a great track record when it comes to climate change. This is a problem, because the group includes the world's main greenhouse gas emitters. G20 countries have agreed to a global target not to warm the earth more than 2°C above pre-industrial levels as part of the UN

The secretive TPP: Never again

One aspect of the Trans-Pacific Partnership (TPP) that has come under criticism is the lack of transparency in the negotiating process. Could a more transparent model be used for these kinds of negotiations? In other areas of official decision-making, recent decades have seen a big shift towards

North Korea's new diplomacy

Russian state-run news agency Tass confirmed on 22 April that Kim Jong-un will be in Moscow for the 9 May Victory Day celebrations. The North Korean leader will be among 26 other heads of state who have so far confirmed their attendance. North Korean Foreign Minister Ri Su Yong (Flickr/UN Geneva)

Six ideas for rescuing Australian digital diplomacy

Australia's approach to digital diplomacy is second-rate and entirely inadequate for a nation that sees itself as 'a top 20 country'. Despite an expanded social media presence, Australia continues to lag far behind other countries – large and small – that are investing serious resources into

Economic history makes a comeback

When the economy is going well, we talk about the bright future. Why is it only when it is going bust that we look to the past? The Economist recently published an interesting article on the resurgence of economic history after the global financial crisis. No-one who reads about the international

China's economic march into Pakistan

The China-Pakistan Economic Corridor (CPEC) is nothing short of a 'fate changer', said Pakistani Federal Minister Ahsan Iqbal, the man behind the historic project. The excitement appears to be mutual, as China has shown equal enthusiasm for the project throughout a two-day visit by Chinese President

What to do about weak world growth

Forecasts prepared for the IMF's 'Spring Meeting' in Washington last week predict global growth of around 3.5% this year, about the same as in the last few years. This is not the 'slowing' discussed so often in earlier Fund documents, but nor is it the normal robust recovery that might be expected

Countering ISIS online

When you look at the global response to the threat of ISIS, a glaring gap is the cyber domain. The internet has been critical to the terrorist group's success. It allows it to communicate unfiltered to the rest of the world, for onward mass dissemination by the media. It helps the group radicalise

Does Australia do digital diplomacy?

After a decade of swimming against the tide, the Australian Government is slowly engaging in the world of digital diplomacy. The term 'DFAT the Dinosaur' no longer applies, a label slapped onto our foreign affairs department in 2010 after a series of public refusals to incorporate the internet

New World Economic Outlook report is out

This week we've had the IMF and World Bank spring meetings. Economic heavy-hitters from around the world descend on DC to attend committee meetings, seminars, briefings, and other policy-maker fun. Also, the IMF's World Economic Outlook is released. Chapter 4 in the most recent edition looks at

Is capital globally mobile?

The Australian Treasury has been busy. On top of its usual output, the last 18 months have included the Financial System Inquiry, hosting the G20, the 2015 Intergenerational Report and the tax white paper. All this while eliminating one-third of its workforce! But today I'd like to focus on the

Why Australia needs Austrade

Bruno Mascitelli is editor of the newly released The Austrade Story: Export and Investment Facilitation Under the Microscope. The Australian Trade Commission, or Austrade as it is commonly known, turns 30 in 2016. It came into existence in 1986 as a statutory government agency for export promotion

Inclusive growth should not be the G20's game

In 2002 David Dollar and Art Kraay, both at the World Bank at the time, published an article in the Journal of Economic Growth called 'Growth is Good for the Poor'. Dollar and Kraay showed that if an economy's growth increased by a percentage point, then growth of the incomes of the poor increased

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