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Home Business The recovery of the US economy in 2021 has both positive and...

The recovery of the US economy in 2021 has both positive and negative effects on the global economy.

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The recovery of the US economy in 2021 Looks bright despite the United States being a severely infected country. With a person infected with COVID-19 It is the highest in the world (over 30 million or almost a quarter of the infected worldwide) and the highest number of deaths at over 500,000, or about 20% of the global deaths.

The reason that the US is likely to recover better than many countries despite the severe impact. (With the US economy shrinking more than 10 percent in the second quarter of last year)

This is because the US government has spent more than $ 2 trillion in economic support. Especially providing financial assistance to people who have been affected by unemployment. And help businesses affected by the COVID-19 outbreak

In addition, the US central bank has injected over $ 3 trillion into the system. To add liquidity to the financial system All of which is an injection of over $ 5 trillion, or 25 percent of the US GDP. Causing the US economy to begin to recover in the second half of the year And the US economy in 2020 was shrinking only 3.5 percent (better than expected in April 2020 that the US will shrink about 6 percent).

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For the year 2021, the recovery of the United States will continue to be positive. With supporting factors:

1. The US continues to stimulate the economy. Biden’s government has passed up to $ 1.9 trillion worth of short-term stimulus measures. And it is likely that another $ 3 trillion stimulus budget will be proposed in the area of ​​infrastructure investment. (This is a continuous investment for many years), which is the constant injection of the government. This makes the US economy stronger and faster to recover than any other country.

2. Although the US economy continues to recover Employment increased accordingly But the US bank still has a view to maintain the liquidity level in the system continually. And leave short-term interest rates low (near 0) for at least a few years, which is the use of monetary policy to stimulate the economy.

3. Another important positive factor is continuous accelerated production and vaccination. Which the US aims that By mid-2021, the U.S. public will be thoroughly vaccinated, worsening infection concerns. Businesses and people can resume normal economic activities.

Therefore, it is not surprising that the US economy will recover stronger and faster than other countries, predicting The US economy will grow 5-6 percent this year and more than 3 percent next year (some agencies estimate that Will grow to 7 percent this year and 5 percent next year)

The recovery of the US economy will have both positive and negative effects on the overall economy. In which if looking in a positive light The recovery of the US will support the global economy as well as the US is the world’s largest consumer. Therefore, exports should expand well this year.

But on the other side US revival Using fiscal policy to stimulate the economy Causing the government to borrow huge amounts of money The debt burden of the US government in the future is high. (Government debt to GDP increased from 79% in 2019 to 100% in 2020), resulting in US bond interest rates continuing to rise (from 0.9% late 2020 to 1.6% today).

Which for countries that have not fully recovered, such as developing countries May be affected by the US interest hike. Which are the cues of global interest It can be seen that bond interest rates in many countries have increased along with the United States.

In addition, the country with a weak economy. Especially countries with current account deficits And fiscal deficits Or a country with high debt Also affected by the appreciation of the dollar. Some central banks, such as Brazil, Russia and Turkey, have begun to adjust short-term interest rates. To support their money from depreciating too quickly

And what to worry about in the future is if the US Federal Reserve pulls liquidity out of the system. Many emerging market countries will also be hit by tight financial conditions once again. (As it did in 2013), with Bank of America Merrill Lynch predicting that the U.S. bank would start pulling money out of the system in early 2022.



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