The global supply chain crisis, the global agreement on minimum corporate tax rate and the record high price of bitcoin are among the top 10 world economic events this year as selected by the Vietnam News Agency (VNA).
1. World economy’s rapid recovery with potential risks
In 2021, the global economy has gradually escaped the recession and recovered quickly as economies reopened and deployed post-COVID-19 growth stimulus packages.
The International Monetary Fund (IMF) forecasts that the world economy will grow by about 6 percent this year - the fastest pace in the past four decades. However, the high and prolonged inflation, plus the emergence of the Omicron variant may hinder the economic recovery in the coming time.
2. Global supply chain crisis
The rapid spread of the COVID-19 pandemic at factories has caused labour shortages, disrupted production, and caused an imbalance between goods supply and demand.
The shortage of ships and containers at major seaports around the world has also led to the congestion of sea transportation. Transport cost on shipping routes from Asia to Europe sometimes increased about 10 times, and from China to the US west coast, 2.85 times.
To avoid disruptions in the global supply chain, many businesses have tended to move their production locations closer to consumption markets and optimised modern supply chains through technological application in distribution.
3. Commitments to phasing out coal-fired power
At the 26th session of the Conference of the Parties of the UN Framework Convention on Climate Change (COP26) in the UK from October 31 to November 13, more than 40 countries, including Vietnam, and organisations have committed to generally phasing out their use of coal-fired power and stopping the support for the construction of new coal power plants.
To achieve the global climate goal, major economies will shift away from coal-fired power by the 2030s and others will follow the suit in the 2040s.
The parties also pledged to increase financial support to poor and developing countries to cope with climate change.
4. Global agreement on minimum corporate tax rate
Finance ministers and central bank governors of the world’s 20 biggest economies (G20) on October 13 approved a global deal to improve the corporate tax system, on the basis of an agreement reached earlier by the Group of Seven (G7) nations.
From 2023, a global minimum corporate tax rate of 15 percent will be applied to companies with revenue of 870 million USD or above. It is estimated that this will generate about 150 billion USD annually in additional global tax revenues.
The deal aims to ensure that multinational businesses are subject to a minimum effective level of tax on all of their profits each year.
5. Central banks beginning to rollback ultra-loose monetary policy
The world's leading central banks have begun to gradually withdraw their unprecedented ultra-loose monetary policy and near-zero interest rate policy after about two years of application to support the economy amid the COVID-19 pandemic.
The Bank of England on December 16 became the world's first major central bank to raise interest rates since the coronavirus pandemic hammered the global economy. The US Federal Reserve (Fed) also announced its roadmap for interest rate hikes in 2022.
The European Central Bank (ECB) and the Bank of Japan (BoJ) have maintained their interest rates but noticed that they would end bond purchases in March 2022.
Such different approaches suggest that the central banks are seeking ways to balance inflationary threats and new risks to economic growth due to Omicron.
6. Busy year of mergers and acquisition
Global merger and acquisition (M&A) activity shattered all-time records in 2021, comfortably erasing the high-water mark that was set nearly 15 years ago.
As of December 16, the value of M&A globally topped 5,63 trillion USD, according to Dealogic data, easily surpassing the pre-financial-crisis record of 4.42 trillion USD in 2007.
7. China’s economic crackdowns
In 2021, China has issued many new regulations to tighten management in such fields as technology, real estate and education, causing greater pressures on private companies.
Chinese property giant Evergrande is on the verge of bankruptcy after the Chinese government enacted new property lending restrictions to curb skyrocketing house prices and excessive borrowing.
China's stricter bills on digital technology also make it difficult for big names in the technology sector such as Alibaba, ByteDance, Weibo and Tencent to operate.
8. Bitcoin’s record high price
Bitcoin, the world's largest cryptocurrency, hit a new record high of 69,044 USD on November 10, and is projected to hit 100,000 USD soon.
The International Monetary Fund (IMF) is concerned about the rapid development of digital currencies without appropriate management regulations.
Bitcoin's sharp price increase has forced countries to tighten the control of the currency, and at the same time, some countries have stepped up the research and testing of the digitalisation of traditional currencies.
El Salvador has become the first country in the world to make bitcoin a legal currency.
9. Disrupted global trade due to stranding of Ever Given in Suez canal
The Ever Given mega-container ship ran aground in the Suez Canal on March 23, holding up an estimated 10 billion USD of goods each day.
The canal, in operation since 1869, carries over 10 percent of global trade, 10 percent of oil, and 8 percent of liquified natural gas (LNG) of the world.
The incident has revealed the weakness of the shipping industry and the global trade’s reliance on the Suez Canal. It has also shown the urgent need to diversify international shipping routes.
10. World facing energy crisis
In 2021, an energy supply crisis taken place across all continents. Wholesale European gas prices were up more than 800 percent, coal prices increased 110 percent and crude oil prices rose to above 80 USD/barrel - the highest since 2014.
The energy market has entered a new price cycle due to strong demand following economic reopening, plus the serious shortage of coal and gas.
The escalating energy prices have pushed up inflation, disrupted production and goods supply chains, and threatened the economic recovery.
However, in the long term, the energy crisis would prompt countries to invest in developing more sustainable energy sources.
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