Andrey Belousov named five trends in the global economy

There are processes taking place in the world that are radically changing the functioning of the global economy. This challenge has risen to its full potential not only for Russia, which came under sanctions, but for all countries of the world, including the largest economies of the USA and China. This was stated by First Deputy Prime Minister Andrei Belousov during a speech at the Knowledge Society marathon as part of the Russia exhibition.

According to the First Deputy Prime Minister, several trends in the development of the world economy stand out now.

“In 2022, an event occurred that fell out of sight of leading analysts. Nevertheless, it happened. This is that the total production of the BRICS countries in terms of share in world GDP for the first time exceeded the total output of the “seven” – the so-called countries of the collective West,” noted the First Deputy Prime Minister.

This has become one of the powerful drivers of the development of the Chinese economy. However, China paid for this by becoming the largest financial contributor to the American economy. For 1990-2015 China’s gold and foreign exchange reserves in dollars increased from zero to $3 trillion. At the same time, starting from the middle of the decade, it stopped financing the US economy – this suggests that China began to direct resources to its own internal development.

Now the institutions that previously ensured global economic growth through increased trade are in crisis. “This is a certain fact that is manifested in protectionism, which is growing in all countries of the world, in trade wars between the United States and China, which were unthinkable in the context of global growth. And in the sanctions that are imposed not only against us, but also against Iran, and to a lesser extent against China and other countries,” the First Deputy Prime Minister said.

This means that when there is a wave of inflation in the world, the largest central banks – the ECB and the Federal Reserve – cannot use tight monetary policy mechanisms to combat rising prices. This is due to the fear that the debt overhang will collapse, the First Deputy Prime Minister indicated.

“Another point is the climate challenge,” Belousov added. There is an objective component – the fact that the climate is really deteriorating and a significant part of the Earth is already falling into zones of water shortage, this entails uncontrolled migration. At the same time, a much more significant story is the energy transition, an attempt to capture the requirements of a green economy as a factor of competitiveness. This is an attempt to complicate trade in products that are dirty from the point of view of the energy transition – coal, oil, metals, fertilizers, chemicals – in order to consolidate competitive advantages, the First Deputy Prime Minister indicated.