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    Home ยป The USA and China’s impact on smaller economies around the world grows rapidly as more COVID-19 strains force the countries into a slower economical pace
    Economy

    The USA and China’s impact on smaller economies around the world grows rapidly as more COVID-19 strains force the countries into a slower economical pace

    mcnBy mcnSeptember 23, 2022Updated:March 13, 2023No Comments4 Mins Read
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    As the 2nd year of COVID-19 comes to a close, the global economy finds itself in a tight spot, with the new Omicron strain of the virus taking the world by storm, many were quick to sell finances in fears of another coronavirus wave setting back the ever-promised economical recovery.

    Despite everyone’s efforts to corral the new virus mutation, even if they are successful, the global economy is bound to take a hit, either way, be it the tighter monetary policy by the US or the Chinese economy’s stagnation in growth.

    With US and China making up for nearly 40% of the world’s GDP, the two giants continuously influence other smaller economies, with emerging ones taking massive risks due to America’s strong growth, causing the cash flow to these countries to dwindle as the dollar grows in power.

    COVID-19 pandemic continues to bite chunks out of the world’s economy

    China, however, has a much simpler to understand effect on the economy, but it is in no way less impactful, with China being the world’s largest consumer of coal, aluminum, cotton, and many other raw materials, a slowdown of China’s spending causes a wave of exporter losses around the world.

    China is currently at great risk of an economical crash, greater than 10 years ago when the government assisted the economical growth by opening credit taps and helping the housing market expand.

    Now, that same housing market is facing huge amounts of debt, along with other companies in the country as the market continues to overextend.

    The International Monetary Fund shows an estimated growth of 5.6% for China’s economy, but those numbers become disappointing when compared to recent years, as a lower growth rate was only recorded in the 1990s.

    With the expansion of their market influence, China’s importance to the global economy has grown as well, and with it, the dependence of other countries’ economies on China importing certain goods, materials, and products.

    Brazil and Chile are under massive pressure from the economical crisis

    The Economist has gathered and published data on certain economical variables for 60 countries, ranging from rich to developing, in an attempt to deduce the greatest losses to be caused by the tighter American monetary policy.

    The most highlighted pressure points are Argentina and Turkey, with the former facing an inflation rate above 50% and growing, while the latter suffers from the government’s decisiveness to lower interest rates due to high prices, substantially damaging the market and its merchants.

    Other countries like Greece are high on the list due to their massive debt load, which the EU has continuously assured will not push the country back into an economical collapse, but the numbers don’t lie and they spell a disastrous continuation for Greece.

    Another country in a similar situation is Brazil.

    Many of China’s biggest exporters like Singapore and South Korea will be unfazed by the Chinese market’s slowdown so long as the Americans continue shopping, but countries like Australia and Germany which export resources and industrial equipment, respectively, will suffer great losses.

    Some countries depend more on China while others are far more impacted by the US.

    Sadly, there are those like Brazil and Chile which are highly dependent on both, and they are visibly taking the brunt of the impact, with inflation rising and China reducing import of goods from the 2 countries, Brazil and Chile are bound on a downward economic spiral.

    With there still being little known about the omicron strain, it is tough to tell to what extent will the new strain affect the global market, but if it depresses trade and growth, vulnerable economies will crack under the pressure and an unrepairable economical crash will be underway for the rest of the world as the chain links crumble.

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