As a result of the corona epidemic, it has become difficult and critical to bring back the normal situation in the overall economy of developed, developing and underdeveloped countries around the world. Overall economic development has not only stagnated, but in some cases has stopped altogether. Every country has to allocate huge amount of money for health sector. As a result, the necessary money could not be allocated to other sectors of the economy. Many urgent economic development projects have been put on hold. The cost of these projects will increase in the future. At this time, many countries of the world have not been seen to take the necessary measures to control the corona virus and keep their economies moving, except for blaming China, the origin of the coronavirus, for a long time. As a result, the problems caused by Corona around the world have become more widespread and strong. At present, the picture of the world economy given by various economic research institutes in the world is shocking.
According to the CD’s latest report, world production fell by 3.4 percent last year. However, according to them, the production rate in the world in 2021 will be 5.5 percent. In 2022 it will be 4 percent. But the world’s poor countries will not be able to increase production. Among the world’s major countries, only China was able to increase its economic growth by 2.3 percent in 2020, i.e., during the extreme Corona period. However, in the same year, production in Europe decreased by 6.8%, in France by 8.2%, in Spain by 10.1% and in England by 9.9%. Among developing countries, India’s output fell by 7.4 percent in 2020, followed by Mexico by 8.5 percent, South Africa by 7.2 percent, and Argentina by 10.5 percent. US economic output is likely to increase significantly over the next two years alone due to significant economic stimulus. In addition, every effort is being made to rid Americans of Covid-19, including the rapid vaccination.
According to the latest IMF report, developed countries have a fiscal deficit of 13.3 percent of GDP. Middle-income economies account for 10.3 percent and low-income countries account for 5.7 percent. Globally, governments will have to allocate nearly $14 trillion to the fiscal sector in 2020, with global public debt reaching 98 percent of GDP. But this figure was 84 percent of GDP in 2019. In short, no country in the world has hesitated to spend money because of Corona. They did not care how much they would benefit from this cost.
Even the fiscal deficit of the United States was 6.4 percent in 2019, but in 2020, the fiscal deficit jumped to 17.5 percent. According to IMF calculations, US debt stood at 128.7 percent of GDP in 2020. But in other developed countries of the world it is 97.8 percent of GDP. And China’s debt is 65.2 percent of GDP.
Recently, President Joe Biden announced a $1.9 trillion stimulus package. Republican senators expressed concern and voted against the incentive. According to them, the stimulus will total $4.1 trillion in 2031, including interest and other costs. Because all incentives have been found to end up costing much more than the amount announced. But in this regard, President Biden has no other choice. Because if he fails to boost the economy then it will not be possible for him to be re-elected in the next election.
So considering the global strategic aspects, before Donald Trump came to power, during the time of President Obama, the way the US relationship with China was progressing on the basis of compromise, his four years in office of the US President was broken. So the real issue is not a quarrel between China and the US. The real problem is whether it is at all possible for President Biden and the President of China to normalize the bitterness between the two countries during the four years of Trump’s presidency. When Ronald Reagan was the president of the United States in 1981, he said, Government is not the solution to our problem, government is the problem. Under Reagan, government debt increased to $1 trillion, which was 31 percent of GDP at the time, but as of 2020, the U.S. government debt stands at $27 trillion, which is 136 percent of total GDP.
The US Federal Reserve monetary policy is to maximize job creation, price stability, and keep interest rates low for a long time. US inflation is below 2 percent, unemployment is low. It has also been possible to keep interest rates low for a long time.
President Biden has pledged to spend four trillion dollars over the next four years to build green infrastructure and create jobs. But before that, 386 billion dollars were spent in the defense sector alone in 2019 and 801,000 people died in the war until 2001. The above costs are incurred depending on the loan. According to the US Congressional Budget Office, this debt will reach 202 percent of US GDP by 2051. If the above situation of public debt in any other country is similar, it is aptly termed as ‘Banana Republic’.
