US, China, And EU To Restructure Post Pandemic World Economy: Says Moody’s Analysis

The US, China, and the European Union (EU) are altogether likely to structure the post-covid world economy as the primary pillars of the tripolar world because of the thickening of attitudes during the COVID-19 outbreak, and the compounding of the existing trends as per the Moody’s Investors Service.

The work of fixing and reconstructing domestic economies will lead the nations to more focus on independence, particularly in strategic industries while rivalry and clashes in technology, trade, and politics will likely to proceed or strengthen, Moody’s said in an analysis on Tuesday. It further also said that political considerations will impact worldwide investment and capital flows.

Moody’s did not mention India’s name in the report, but the Narendra Modi administration is on its way to improve self-reliance to not only control the economy out of the current crisis but also to maintain a strategic distance from the future supply disruptions. India is facilitating production incentives to overseas firms for enabling them to set factories in India and also introduced tariffs on imported items like television parts in recent months. The Modi administration is eager to step up local production capacity in the Electronics and mobile phone sectors for which tariff initiatives are also employed.

As per Moody's analysis, the interest of the three pillars - the US, China, and the EU will keep on separating. The economies of the US and China will not be disconnected but it will turn out to be more disengaged, while the EU will stay a promoter of a rules-based global trading system but will probably be pushed in a more protectionist direction.

Recommended Read: Post Coronavirus, China Looks Set To Grow While The Rest Of The World Contracts

As per the report, “Full-blown confrontation between the three pillars is unlikely given their interdependence and some degree of global cooperation on issues such as climate change and pandemics will remain,".

The trade relationships will have an increased focus on regions given the attention nations are providing for supply chain resilience, the report said. It further said that the Belt and Road Initiative (BRI) will keep on being a significant instrument of China’s trade policy.

The report said, “The US, China, and the EU have vital importance in shaping the world economically, politically and strategically through their economic size and resources,". Adding that together, they represent about half of both worldwide GDP and trade in goods.


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