Chapter 1508 - 41: World Economic Recovery (2)

Chapter 1508: Chapter 41: World Economic Recovery (2)

"This is a recent report in the economic field. Take a look at it first, and then share your opinions and views."

"Yes, Father!" Friedrich took a somewhat thick piece of material from Ernst’s hand and began to read it while sitting in a chair.

As he scanned through the materials, Friedrich’s brow involuntarily furrowed.

Although these data can’t be entirely accurate due to involving other countries, they still hold significant reference value.

Comparing these data with economic data from within East Africa reveals one point: the economic recovery process in East Africa is slower than in Europe and America.

After a long while, Friedrich finally finished reading all the materials, while Ernst sat patiently waiting for Friedrich to speak.

"Father, from the materials provided by the statistical departments, it can be seen that the global economy is generally in a stage of recovery. The nearly two-year-long economic depression since the end of the war has finally hit bottom and rebounded."

"However, due to various factors, the economic trends in different regions of the world may vary, such as our current economic growth rate being slightly inferior to that of the United States or Western Europe."

"There are even some parts of the world where economies have fallen instead of rising, though the overall impact is not substantial."

Ernst asked, "What is your opinion on the current economic growth rate in East Africa being inferior to that in Europe and America?"

Friedrich responded confidently, "Although our domestic economic growth expectations are not as high as those of Europe and America, I don’t see this as entirely negative."

"This is because East Africa is undergoing an economic transition, with substantial funding being invested in research and development, as well as supporting high-end and emerging industries, a process which is slow and difficult to yield immediate results."

"For instance, in the past two years, our steel industry has shut down and eliminated some inefficient or outdated production facilities in order to adjust and innovate."

"At the same time, stricter standards have been set for the development of the steel industry, raising the entry threshold, which has resulted in a decrease in our steel production, lagging behind important steel-producing countries like the United States and Germany."

Since 1910, significant changes have occurred in the landscape of the East African steel industry, which transitioned from being completely monopolized by the East African Government to allowing private investment and the establishment of steel enterprises.

However, due to the low general income level and weak private capital in East Africa in the early stages of market liberalization, private steel enterprises were predominantly low in technology and small in scale.

After over a decade of development, these private steel enterprises have undergone fierce competition and mergers. By 1920, they formed a group of steel production companies with a certain scale, although still unable to compare with East African large state-owned steel enterprises, they are by no means inferior when compared to some local enterprises.

Private steel enterprises also significantly contributed to the rapid expansion of steel production in East Africa during the war. Despite their generally small scale at the time, their sheer numbers were enough to exert a significant influence on the national steel market in East Africa.

In fact, during wartime, East African private steel enterprises, after years of rapid growth, had accumulated some capital, even acquiring some local steel industry enterprises in poor operational condition.

By the time the war had entirely ended, the proportion of national steel production accounted for by East Africa’s private enterprises had reached nearly six to four.

This was primarily because the production capacity of East Africa’s large state-owned steel enterprises was remarkably high, with individual steel enterprises capable of reaching tens of thousands, hundreds of thousands, or even millions in steel output. Such large-scale steel production enterprises require substantial investment, only feasible for the East African Government.

During the Five-Year Plan period, as the East African steel industry shifted towards high-quality development due to policy influence, related laws, and measures were introduced to raise the industry entry threshold and push for the elimination of outdated capacities.

This undoubtedly suppressed the short-term development of East Africa’s steel industry, as some steel plants might not pass government audits due to equipment conditions, operational status, or other adverse factors, resulting in the halt of operations or possible direct closure.

Consequently, overall steel production capacity naturally did not experience a significant rise; instead, there was a marked decrease in the early stages.

Targeting this point, Friedrich said, "Looking at the current development situation in international markets, global steel production capacity has been in an explosive phase over the past few years."

"Steel production in European countries resumed, and the Empire and United States saw an era of unchecked growth in steel production capacity during wartime. Even many underdeveloped countries and regions invested in building numerous steel production enterprises during the war."

"Thus, the global steel output in these years has greatly increased compared to pre-war levels, but this growth is equally unhealthy."

"Increasingly fierce competition caused international steel prices to continually decline, with some steel enterprises even operating at a loss, which is not a good phenomenon."

"However, apart from East Africa, there are not many countries in the world that are aware of this point. Their steel production enterprises still recklessly expand capacity due to market inertia or other factors, which tends to lead to a vicious cycle, where the more produced, the lower the steel prices, potentially leading to a break in the financial chain, causing mass closures of steel enterprises."