Summary
The outbreak of COVID-19 and its economic consequences is one of the current topics causing discussions among economists. In the article “International trade is back, boosting optimism about a global recovery,” Bartholomeusz (2021) proves that the global economy is recovering from the pandemic. He states that both fiscal solutions and consumers’ behavior influenced the situation in a positive way. Further, Bartholomeusz’s (2021) ideas are summarized and analyzed in detail.
Summary of the Article
The article starts with an optimistic statement that despite the collapse of global trade caused by the pandemic, the situation is improving faster than anticipated. Bartholomeusz (2021) reminds us that China was the first country to recover economically due to its response to COVID-19 and its role as the world’s largest exporter. According to statistics, China’s exports in January and February were 60% higher than in the same months in 2020 (Bartholomeusz, 2021, para. 8). The US and Germany can also boast a recovery in export, together with boosting the economies of Australia and Canada.
The author adds that in January, the country experienced the most significant trade surplus despite the Trump administration’s trade sanctions. Bartholomeusz (2021) explains this tendency by the rise in global debt and the continuous injections of liquidity. He mentions that the US Federal Reserve Board’s balance sheet has increased from $US4 trillion to $US7.6 trillion from the beginning of the pandemic and is still expanding (Bartholomeusz, 2021, para. 18). Consumers also play a role in this recovery due to the rise in savings and vaccination rates. At the same time, the author mentions that the dearth of containers can be an obstacle to international trade. He explains that the changed port congestion and one-way traffic created a shortage of containers in Asia. Therefore, it is essential to restore the activity in western ports to reduce the effect of the imbalance of containers.
Discussion
COVID-19 affects different aspects of life, and the global economy is only one of them. For example, the foreign exchange market is significantly influenced by international trade changes. Governments impose higher tariffs and the competition within intra-industry trade increases. Countries with stronger economies gain an absolute advantage in certain business areas, negatively affecting less successful regions. The economic health of a country defines the welfare of its citizens, which makes global recovery an essential goal. The article by Bartholomeusz (2021) demonstrates that there is an optimistic economic prognosis and that certain nations, including China and the US, have already managed to overcome the pandemic crisis. However, this topic remains important because many countries are still struggling to control their international capital flows. Moreover, the author himself confirms that some problems, such as container imbalance, still need to be solved.
Graphical Analysis
The following visual economic model compares the balance sheet of the US Federal Reserve Board at the time of the pandemic outbreak and today. In 2020, it was estimated at $US4 trillion, while in 2021, it rose to $US7.6. Bartholomeusz (2021) adds that the balance sheet is still expanding due to bonds and mortgages. The author explains this tendency through the fiscal strategy that the US embarked on in response to the pandemic.
Consequences
Even though the forecast for global economic health is rather optimistic, it is possible to suggest that it may stay at the pre-pandemic level for a long time. One year after the virus outbreak, epidemiologists continue debating about when the situation is expected to stabilize. Therefore, as the problem remains, it is possible to predict stagnation in certain spheres of international business, such as tourism and transportation. Moreover, since much of the countries’ economy depends on export and import, COVID-19 restrictions may create obstacles, such as logistic problems mentioned by Bartholomeusz (2021). These changes are likely to affect domestic economies as well since the global economic issues significantly influence currency rates, salaries, prices, and other aspects. Therefore, it is necessary to consider all possible outcomes and continue work on the global economic recovery.
Reference
Bartholomeusz, S. (2021). International trade is back, boosting optimism about a global recovery. Brisbane Times.