Dark clouds cast gloomy shadows on G2 economies

The year of 2022 will place a burden on the shoulders of the top two global powerhouses in the never-ending fierce competition for leadership – the United States and China, according to major overseas news reports. The Telegraph, a British newspaper, analyzed on Friday that China is likely to suffer a severe economic slowdown due to the consequences of tight border control following the COVID-19 pandemic, poor housing market conditions and power shortages. Likewise, the United States has a hard time handling the spread of the virus, inflation, a supply chain crisis, a deadlock situation in logistics and decrease of global leadership. This year is expected to be a “minefield” for U.S. President Joe Biden who has just started his second year at the White House, said the Hill, a U.S. politics magazine, on Saturday.

Nomura Holdings Inc., a Japanese investment bank, expected the U.S. economy to grow 4.6 percent this year, 0.3 percentage points up from the Chinese economic growth of 4.3 percent as projected. The United States is expected to grow faster than China in 46 years, which is the first time since 1976.

The Telegraph projected that India, a “rising giant,” will grow by 8.5 percent double China’s rate, predicting that the Indian economy will enjoy a long-lasting economic bonanza surpassing the Chinese economy. AXA Investment Managers, a French investment management firm, also shared a pessimistic view of the production capabilities of China, the “world’s factory.” The South Korean economy will be inevitably affected by a slowing Chinese economy not only because it is South Korea’s top export destination but also because it is home to many South Korean production facilities.

The Hill also pointed out that U.S. President Joe Biden should resolve the ramifications of pandemics including the ongoing situations with COVID-19 and the Omicron variant on medical and financial systems as well as inflation rates. He has recently recorded the lowest approval rates in the 30-40 percent ranges since his inauguration. The ruling Democratic Party’s Democratic election strategist Joel Payne was quoted as saying, “Joe Biden is president because of COVID, but Dems are struggling right now because of COVID. And until they can find someone to figure this out, people are going to be mad about COVID.”


Eun-Taek Lee nabi@donga.com