The recovery of the global economy may be only temporary

“The more intense the sun, the more the shadow is deep.” On April 18, 2017, the IMF published the latest World Economic Outlook report, titled “Gaining Momentum”. Based on the strong recovery from the global economy in the past six months, the IMF is expected to raise its global economic growth rate by 0.1 percentage point to 3.5 percent over the previous six months. However, in the face of cyclical constraints, the IMF remains at a high level Prudent, did not forget in the “kinetic energy enhancement” marked with a question mark.

In fact, the IMF’s overall judgment of the global economy and our previous “cycle superposition” paradigm is exactly the same, IMF believes that the global economy is in the “short cycle rally + long cycle down” complex state, the cycle of restless core driving force is pre-expansion The central effect of the policy is obvious, and with the decay of the policy effect and the long-term constraints, the global economy still faces a huge downside risk. Recovery in the sun at the same time, also left a shadow, the total demand of the new cycle has not yet come, after restlessness, the global economy will inevitably encounter an empty adjustment time.

Short-term growth cycle agitation. There is no doubt that the global economy is experiencing the most exciting and confusing period of time after ten years of crisis. Based on our observations of the World Economic Outlook over the past decade, the IMF has an overly optimistic endogenous bias that the IMF is expected to cut expectations most of the time it is expected to update in nearly 40 of the decade.

However, in April the IMF uncharacteristically raised its forecast for global economic growth by 20 percentage points in 2017, indicating that the global economy was stronger than the “optimists” in the past six months, especially in the first quarter of 2017 The Abnormal strong short-term growth performance, mainly from the commodity market to warm up to the resource industry to bring the growth boost, pre-demand side easing policy lag effect focused on the Sino-US economic “dual nuclear stability” role than expected to play.

Looking at the short-term growth perspective, we believe that although 3.5% of growth is expected to have reached the trend level of 1980-2016, this agitation lacks credible endurance because, first, as the world’s largest and most stable contributor Of the two economies, the United States 2.3% and China 6.6% of the economic growth in 2017 is expected to remain weaker than the 2.6% and 9.7% trend level;

Second, the last six months, the most unexpected economies are the UK, Japan, Spain, China and Russia, its economic growth forecast in 2017 were raised 0.9,0.6,0.4,0.4 and 0.3 percentage points, respectively, compared with China In addition, the performance of several other major economies is expected to bring some “oversold bounce” nature, of which Russia and Japan are still facing the risk of growth stagnation; third, whether it is a commodity market, or loose policy, Are experiencing new changes in marginal tightening, which will weaken the global economy short cycle rally.

Long-term recovery is risky. From a long-term perspective to further examine the global economic cycle of restless future is more optimistic. IMF focused on the six downside risks: First, protectionism led to trade growth and cross-border investment at the same time slowed down, and second, the United States to accelerate the rate hike caused by tightening the financial situation, the third is the financial regulation of excessive risk of excessive increase, The risk of market balance sheet highlights the fifth, the developed countries, excess capacity led to the decline in production efficiency, six geopolitical turbulence and other non-economic factors to bring the risk of black swans.

We believe that, in addition to the IMF’s realistic constraints, the fundamental reason for the weak recovery in the global economy is the slowdown in total factor productivity: first, the financial innovation has been restrained to a certain extent since the crisis decade, and the optimal allocation of resources has been restricted. Second, since the crisis, the global demand side stimulus policy frequently introduced, the supply side of the structural policy is relatively scarce, the policy stimulus but inhibit the natural recovery of production efficiency;

Third, although the technology in accelerating the evolution, but the technology on the application and penetration of the real economy is still a bottleneck; Fourth, the downstream risks before each other to strengthen each other to form a negative cycle, increased the possibility of systemic risk; Protectionism, islanding, populism prevailing, economic risk to geopolitical risks deep conversion, productivity boost by multi-level suppression.

Protectionism. In many downside risks, IMF most worried about is the trade protectionism. In the previous study, we emphasized that economic fundamentals determine the trade game atmosphere, the fundamental reason for the intensification of global trade frictions is the endogenous antagonism of the global economic cycle dislocation, and that Trump’s highly provocative policy words and deeds Exacerbated this endogenous trend.

The IMF highlighted the danger of protectionism in the latest Global Economic Outlook and demonstrated its objective inevitability from another academic point of view. IMF research shows that global inequality is closely related to globalization. Technological progress and globalization have both brought about the long-term prosperity of the global economy and quietly led to a decline in the share of labor income in national income, that is, as Thomas Piketty, in the 21st century “Pointed out that relative to labor, capital gains more income from economic growth, which led to global, especially in developed countries, income inequality continues to intensify.

And the deterioration of polarization has led to the rise of populism, anti-globalization tendency to rise, which is the protection of the prevailing internal factors. In terms of economic theory and practical practice, succumbing to protectionist pressure is clearly not conducive to long-term recovery, therefore, the IMF called for the development of active labor market policies, improve tax progress, reform the housing and credit markets, the implementation of structural policies And so on, to cope with the extreme pressure of protectionism caused by inequality.

We believe that, despite the obvious policy rationality of the IMF’s proposal, protectionism is difficult to suppress in reality in a complex game environment, which will further suppress the long-term prospects of the global economic recovery. In fact, the IMF also kept a clear understanding, the April report, IMF 2017 trade growth is expected to remain low at 3.8%, and 2018 trade growth is expected to cut 0.2 percentage points to 3.9%, global trade growth remains Significantly weaker than the trend level, globalization, low tide is entering a climax.

Economic and financial complex linkage. April 2017 IMF’s World Economic Outlook report further identified our main judgment on the global economy: First, the short cycle of the rebound does not mean that the long cycle up, the total demand cycle is still brewing, did not form, “false inflation “Yesterday to reproduce; second, China’s economic growth continued to be expected to increase, strong performance triggered a comprehensive expected reset;

Thirdly, the global economic protectionism is difficult to easily reverse the endogenous causes, trade frictions intensified in 2017 is inevitable; the third is that the global trade protectionism is difficult to easily reverse the endogenous causes,

Fifth, China and the United States has always been the global economic recovery of the dual-core, China and the United States but weaker than the trend of the trend of the growth rate of the global economy determines the tone of the weak recovery; Sixth, the global economy is in a cyclical macro chaos, Deterministic clustering is the greatest certainty.

We believe that changes in the fundamentals of the economy will eventually be mapped to the financial market, based on the cycle of restless market frenzy is difficult to sustain, protectionism and the geopolitical risk caused by a certain degree of suppression of risk appetite in a comprehensive return, and macro chaos (Such as the long-term strength of US and US infrastructure and the Hong Kong stock market) will show a long-term comparative advantage in market volatility.