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Global Economy

The ebbs and flows of global economic conditions, trade and capital flows, thus have substantial implications for the Australian economy, and Australia’s major regional trading partners. Understanding the broad trends, and identifying emerging challenges and opportunities within the global economy, is central to the work of the International Economy Program at the Lowy Institute.

The highly integrated nature of the modern global economy became especially evident during the 2008 global financial crisis. What began as a localised problem within the residential asset-backed securities market in the United States, eventually brought down major financial firms across the Western world, and ultimately pushed the United States and Europe into a deep and prolonged recession. Although global economic growth has recovered somewhat since 2008, it is still much lower than pre-2008 trends, and the hangover from the crisis has manifested itself in the form of high unemployment levels throughout much of the developed and developing world, as well as an increasing level of inequality both within and between countries.

Understanding the economic rise of Asia, and particularly of the growing middle class within Asia, is also crucial to the broader work of the Lowy Institute. Political economy analysis on major players in the region, chiefly China, India and Indonesia, features heavily in the work of the East Asia Program and the International Security Program.  

Papua New Guinea: Keep calm and muddle through?

By Jenny Hayward-Jones, Director of the Lowy Institute's Melanesia Program, and Jonathan Pryke, Research Fellow. Papua New Guinea has been in the international spotlight a lot in the last month and it has been almost all bad news. Revelations of a record budget deficit, the emerging worrying impact

Economic crisis in China? We're not there yet

I started my job at the Federal Reserve three weeks before Lehman Brothers declared bankruptcy. I wish I had kept a diary of my initial months at the Fed, so I could recall clearly what we thought was happening each day. I do remember there was a discrete point where suddenly everything felt like

Choking aviation system threatens China's ambitions

Last month Hong Kong's Cathay Pacific airline began to cancel some routes to mainland destinations – a surprising decision given the huge potential in China, where air journeys have doubled since 2008. But Cathay's reason is not demand. It's because flights in China have become so unreliable that

Why we still need UN climate negotiations

The Marrakesh Accords, the Bali Roadmap, the Cancun Agreements, the Durban Outcomes, the Doha Climate Gateway, the Lima Call for Climate Action – the grand names given to decisions taken under the UN's Framework Convention on Climate Change (UNFCCC) stand in contrast to the meagre progress made on

Lebanon's garbage crisis reveals political paralysis

It's 2014 and it's a beautiful summer evening in Lebanon. As the heat of the day subsides, and the rubicund sun slowly sinks into the shimmering azure sea, breathe deep and you can inhale a malodorous scent that gently wafts up from the pile of burning trash emanating from the Karantina waste

Indonesia: We don't have to be condemned to crisis

Ken Ward is to be congratulated for a straight forward and sober analysis of the Australia-Indonesia relationship. In his own matter of fact style, Ken takes us through a complex relationship and provides unique understanding and insight. His core point is that the Australia-Indonesia

Interview: Sadegh Zibakalam on the Iran nuclear deal

Sadegh Zibakalam is a prominent Iranian intellectual and political commentator and a Professor of Political Science at the University of Tehran. I spoke with him from Tehran: Q. Is this a good deal for Iran? How significant are the concessions made by Iran to reach this agreement?  Obviously it'

History rhymes on Greek debt

Just about everyone agrees that the Greek problem has been kicked down the road again, and probably not even very far.  The fantasy nature of the 'agreekment' is clear. Let's put to one side, for instance, a structural reform program which demands that Sunday be mandated as a work-day. This might

Russia gives way to China in BRICS and SCO

This month saw a super summit of two organisations that are significant for both Russia and China. The 7th BRICS summit and 15th Shanghai Cooperation Organisation (SCO) summit, both held in Ufa, Russia, included the typical member-state declarations confirming cooperation on major issues such as

Iran nuclear deal: Surrendering to grim reality

The conclusion of the Iran nuclear deal – or the Joint Comprehensive Plan of Action, to give it its formal title – has already guaranteed us one thing: mutually assured hyperbole. Barrages of outrage were being fired even before the deal was signed. Israeli Prime Minister Benjamin Netanyahu

China's record shows it isn't ready for global leadership

Michael Thawley's comments on China's present global leadership credentials and ambitions are correct and phrased in the refreshingly direct manner Australians usually take as a badge of national pride and uniqueness. The fact that his comments caused such a stir in Australia (and seemingly in

Is China ready for global leadership?

Is China ready for a larger global role and should the outside world, in particular a regional partner like Australia, embrace this possibility? Evidently not, judging by remarks made by the Secretary of the Prime Minister's Department, Michael Thawley. 'China wasn't ready to take on the

Iran has made big nuclear concessions in Vienna

Another seven days to reach an agreement; that's what the P5-1 decided this week when they weren't able to meet their 30 June deadline for a final deal on Iran's nuclear program. While some differences remain, both sides have come too far to walk away. The potential agreement achieves Western

Peak box? Global container trade is slackening

In a little-noticed interview, the chief of Panama's Canal Authority concedes that 'the world and the canal were unlikely to ever again see the booming container trade that characterised the 1990s and early 2000s' due to shifting manufacturing patterns and American thrift. Obviously, he has

Beijing should hasten slowly on AIIB

The establishment of the Asian Infrastructure Investment Bank (AIIB) reached another milestone on Monday when 50 of the 57 founding members signed the AIIB's Articles of Agreement. Seven countries are still sorting out domestic requirements before signing. China's Finance Minister Jiwei Lou and

China makes its formal climate-change pledge

China's long-anticipated formal pledge to international climate change negotiations, it's 'intended nationally determined contribution' or INDC, has arrived. China's target is a 60% to 65% reduction in the emissions-intensity of the economy by 2030 pegged at 2005 levels, with carbon dioxide

IMF belatedly rethinks austerity

When we get enough perspective to write a balanced history of the 2008 global financial crisis and the subsequent feeble recovery, fiscal policy mistakes will surely feature largely in the narrative. In the form of a new IMF paper, we are beginning to see that history taking shape, and with it a

BRICS New Development Bank moves ahead quietly

While Beijing's Asian Infrastructure Investment Bank (AIIB) has won overwhelming support (to the surprise of many, including China itself), another bank headquartered in China seems to be flying under the world's radar. Few people have heard of the BRICS New Development Bank (NDB). This was the

Five points that get lost about the Greek debt crisis

  Rather than focus on the blow-by-blow developments of the umpteenth meeting in the Greek crisis, here are some higher level issues that often get lost in the summitry din: At the moment, the parties are negotiating over a disbursement of €7.2 billion. This is the last €7.2 billion to be

MRC bows out of Don Sahong discussions

There has been little news of the much criticised proposed dam at Don Sahong in the far south of Laos since the beginning of the year, when the Mekong River Commission (MRC) arranged for a series of public meetings to be held in member countries to discuss the dam. From the start, these meetings

Liberalism, China and the internet

'It's not that laws aren't relevant' said MIT Media Lab co-founder Nicholas Negroponte during the 1990s, 'it's that the nation-state is not relevant...The internet cannot be regulated.'   Negroponte's assessment has not aged well, but to be fair, he was not alone in his belief. Digital activist

The road to Paris: Ten days and counting

The latest round of negotiations for the UN's Framework Convention on Climate Change closed in Bonn last Friday with mixed results. With ten formal negotiating days left until crucial climate negotiations resume in Paris later this year, the clock is ticking. Bonn Climate Change Conference, 1 June

Indonesia under SBY: Stability, stagnation, or both?

'What's in a name?' Shakespeare's Juliet asks. Quite a lot, as things turned out for her. And so it is for the just-published proceedings of the ANU Indonesian Update, titled The Yudhoyono Presidency: Indonesia's Decade of Stability and Stagnation. A 'mini' version of the Update was held at the

Still debating inequality, 40 years on

Thomas Piketty's Capital in the Twenty-first Century put inequality centre-stage in the economic debate. But the topic has been around for a long while. Brookings has recently republished Arthur Okun's 40 year-old Equality and Efficiency: The Big Trade-off, The launch was an opportunity to bring

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