The world economy is in desperate need of recovery, particularly after the global pandemic and the economic crisis it brought about. Thankfully, there are now signs of an economic turnaround, which could be just the positive development that the world’s markets need to start heading in a direction of recovery. This article will list several important signs that the global economy is making a slow but steady turnaround, giving hope to investors and citizens alike.
The Stimulus Packages
One of the major drivers of economic recovery around the world has been the various government stimulus packages that have been put in place. Governments have taken measures to provide stimulus for businesses and citizens, often in the form of grants, debt relief, and tax cuts.
The U.S. Government is spending more than $1 trillion on various fiscal stimulus packages, many of which are aimed at helping small businesses, banks, and other sectors of the economy to stay afloat in a time of crisis.
The European Union has allocated more than $750 trillion in economic recovery programs. These programs are aimed at providing financial aid for individuals and businesses, as well as stimulating growth and job creation.
China’s $1.25 trillion stimulus package primarily focuses on providing support for businesses and helping to boost consumer spending.
An Increase in Manufacturing
Manufacturing activity in many parts of the world has seen an increase in recent months. This influx of activity is an important signal that the global economy is indeed making a slow but steady recovery.
In the U.S., manufacturing activity has seen a remarkable increase, with new orders, employment, and production all on the rise.
The EU has also made some headway, with a 2.2% year-over-year growth in factory output in July, the sharpest rate in more than two years.
China’s manufacturing sector is on the road to recovery, with July’s Purchasing Manager’s Index (PMI) standing at 51.2, up from a record low of 35.7 in February.
Stabilization of Stock Markets
One of the most important indicators of economic health is the state of the stock market. The stock markets of many countries around the world have seen a great deal of volatility as a result of the COVID-19 pandemic, but thankfully have started to stabilize in recent months.
The U.S. stock market has seen a steady recovery in recent weeks, with the Dow Jones Industrial Average climbing to its highest level since before the pandemic.
China’s Shanghai Stock Exchange Composite Index has seen a rebound in recent weeks, with gains of more than 16% since the start of June.
The European markets have been surprisingly resilient, with the Euro Stoxx 50 Index still about 3% higher than where it was at the start of the pandemic.
The Emergence of Vaccines
The development of COVID-19 vaccines has been a major factor in the global economic recovery. With vaccines now being rolled out in many countries, there is increased optimism that the pandemic will soon be under control.
Pfizer/BioNTech and Moderna have both developed highly effective vaccines and are expecting to have them ready for widespread distribution soon.
Johnson & Johnson is also developing a single-dose vaccine that has the potential to be a game-changer in the fight against COVID-19.
The Imperial College London has developed a vaccine candidate that has been shown to be both safe and highly effective.
Increase in Consumer Spending
The most important driver of economic growth is consumer spending, and it appears that this is on the rise. This is particularly encouraging as it suggests that people are more willing to open their wallets and invest in the economy.
In the U.S., consumer spending leaped a record 8.2% in June, and total retail sales have risen for three consecutive months.
In the EU, retail sales rose 7.7% in July from the previous month, the largest increase since records began in 1995.
In China, retail sales grew 4.3% in June, the first time it has seen year-over-year growth since before the pandemic.
The world economy has been hit hard by the COVID-19 pandemic, and it has been a long and painful journey to recovery. But there are signs of hope on the horizon, with governments around the world putting in place fiscal stimulus plans and the stock markets beginning to stabilize. The vaccine developments are particularly encouraging and everyone is hoping that this will be the light at the end of the tunnel. The emergence of the global economy is not instantaneous, but thankfully things appear to be heading in the right direction.