Exploring monetary cooperation in East Asia

Beyond the single currency trap in the euro zone, the world economy remains under the threat of several destabilising forces. In general terms a financial crisis is likely as the mechanisms at work before the crisis of 2008 have not been fundamentally changed. A deep downturn can be expected in 2020 thanks to cumulative factors. US growth appears unsustainable with the progressive exhaustion of the effects of the tax cuts, the increasing public and external deficits, the impact of the trade war in some sensitive sectors and the instability of the financial markets. Only the boom of the US oil sector has widened the room for manoeuvre. Some large emerging countries (Brazil, Argentina, Turkey) are facing huge imbalances. East Asia is more resilient and China has launched a new recovery plan based on credit. The globalization has been marked by a turning point since 2008 under the effect of structural factors. The increasing implementation of robotization in production processes combined with the rising unit labour cost in China and other emerging countries have eroded the advantages of global value chains from the EU or the United States to China. The current trade war between the United States and China reinforces this evolution. This could contribute to launch some relocation of activities in the industrialized countries and transform the global economy into a more regionalized one.