We all know that the virus we have besieged has not only disrupted our lives, but has hit our economies with unprecedented violence.
The epidemic has spread around the world with similar characteristics, but the strategies and tools for responding to the disease are different, and their effects vary. As a result, even in the presence of a more widespread state of emergency, there is intense debate over how and who will come out of the crisis first, and what the characteristics of the post-Govt economy will be.
I would like to start immediately with a statement of excess, but have all the elements to conclude that China and the United States will be the big machines of the world economy more than ever. It’s easy to say today, but not when things started, because no one expected events to happen.
In fact, China has already grown by 2.3% in the grim 2020 and Prime Minister Li Keqiang, in the opening session of the full assembly of the National People’s Congress, is still in full swing in Beijing, setting a minimum of 6% growth in the current year, 11 million additional jobs. Yet this goal was considered too conservative by most Chinese economists. The real surprise, however, is the United States, where not only does it show signs of industrial recovery, but there is a shared belief that the first successes of the vaccine outbreak and the impressive support measures that Biden expects will already be produced from it. Moment. Year, growth rate higher than 2019. Among American economists, including Keynesians, a debate has begun over whether even the injectables of the purchasing power predicted by Biden have been overstated. Incredibly, they are expected to reach an amount unlike our country’s GDP.
While not yet out of crisis, there are those like Larry Summers who believe that these massive cash flows could trigger a dangerous inflationary process. With equal power, Paul Krugman said this will not happen because consumption will slowly recover. To give an example that everyone can understand, Krugman explains that those who have not been to a restaurant for six months can certainly not make all the food they have not eaten before. However, beyond the academic debate, the recovery of manufacturing output that has now begun around the world is already causing the prices of raw materials and energy to rise more widely.
The head of the US Federal Reserve said price increases were real, but quickly said they were temporary and sectoral events. With the current low interest rate policy, Powell decided to give the economy a breath of fresh air, at least for now. I personally do not believe in the relevance of the current increases, but first, I must acknowledge that a small inflation will not be affected, and secondly, in the current situation, there is still time to intervene if price increases are proven to last longer than expected.
However, due to the extraordinary spread of the adopted policies and vaccines, the United States has already entered a phase of strong recovery, although it has not reached the growth rate of China. It is a recovery that Europeans are most interested in because, unlike what is happening in the case of China, it will be accompanied by a significant deficit in the trade balance, especially a deficit that is favorable to our exports. In this regard, we welcome the suspension, even though Trump’s obligations to trade with Europe have now been limited to four months. This decision not only supports our exports, but also opens up the possibility of a more integrated trade policy between the United States and Europe than what is happening now. Even in the face of existing political tensions, a co-ordination is needed to achieve more equal terms in trade relations with China.
So the economic situation outside of Europe is developing in a positive way, but it is clear that we can only take advantage of it when we have the same vaccine spread. For now, the recovery only affects our manufacturing sector, which is showing a positive trend in Italy as well, in the first two months of the current year. However, even though the manufacturing industry is very important to us and has a decisive influence in other parts of our economy, the surplus value produced by it does not reach 20% of the total, while 70% is produced by the tertiary sector, which is now in dramatic crisis, solving only the vaccine Can.
At the end of these reflections, we must return to the simple and predictable conclusion that even in a global situation where light is seen at the end of the tunnel, European recovery is entirely conditioned by the spread of vaccines. So, wherever they come from, every effort is made to buy more, and every effort to secure our future is welcome, and to produce them in Italy as well. Anyway, in the meantime, let’s make sure to inject as quickly as we can!