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China was hit hard by covid-19 before the rest of the world. But tight and swift management gives the country an economic advantage over its archrival this year and for years to come, British researchers predict.
The outgoing president of the United States, Donald J. Trump (left), has received much criticism for his handling of covid-19. This, according to British researchers, may have cost the United States five years as the world’s largest economy. Here with Xi Jinping of China, who is now expected to assume the throne in 2028.
Nicolas Asfouri / AFP / NTB
Christmas is full of traditions. On the second day of Christmas, there is always a league round in the best English football. In addition, the World Economic League Table report from the Center for Economics and Business Research is published. CEBR is a British institute that researches economic development around the world.
The CEBR warns this year that the different handling of the pandemic by countries will have enormous consequences for economic growth in the coming years.
The institute collects financial data from around the world. Countries are classified by annual gross domestic product (GDP). This corresponds to the value of all goods and services produced in the country.
China has recovered strongly
China was the first country to be heavily affected by the coronavirus. However, the country’s economy is doing relatively well, CEBR researchers believe:
– China is estimated to have GDP growth of 2 percent in 2020, while other major economies are expected to report a decline for the year.
This is in stark contrast to CEBR’s prediction just after the global shutdown: On March 20 of this year, CEBR predicted a 2 percent drop in China’s economy in 2020.
The United States has been behind it for 130 years as the world’s largest economy. Americans’ handling of the pandemic means the end of this era is now much closer, believes CEBR.
After China has adapted to the market economy in recent decades and has become an industrial superpower, the country has seriously entered the battle for the throne.
“The corona pandemic and the economic damage that has followed have definitely gone to China’s favor in this rivalry,” the CEBR researchers write.
They note that China’s strict and rapid handling after the first wave has led the country to avoid having to reintroduce the strongest measures against infection.
At the same time, they believe that America’s share of the global economy will fall from 2021 and that China will overtake the country as the world’s largest economy.
– We now expect this to happen in 2028. It is five years earlier than we predicted in our previous edition of the report, the CEBR researchers write.
The Norwegian economy contracts this year
CEBR assumes that the US economy will contract in 2020 and return strongly next year.
The United States economy will grow 1.9 percent annually between 2022 and 2024, before growth slows to an annual rate of 1.6 percent by the end of the 2020s.
By comparison, China’s economy is expected to grow 5.7 percent per year through 2025. The pace will then drop to “just” 4.5 percent per year in the last half of the decade.
CEBR predicts that the Norwegian economy will contract 2.8 percent this year. Statistics Norway predicts a decrease of 1.6%. Norges Bank forecasts a 1.3 percent drop. Variations in forecasts may be due in part to different adjustments by currency.
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4 percent drop in world GDP
The pandemic will cost the world economy $ 6 trillion this year, according to CEBR. This corresponds to NOK 51 billion or five oil funds.
By 2020, the world’s total GDP will fall by around 4 percent. This is more than twice a drop than the financial crisis of 2009.
But the researchers warn of a high degree of uncertainty.
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