On today’s show, we’re talking about a global perspective of growth. The World Economic Forum opened this week in Davos Switzerland. The price of admission to that conference is high, but the networking is awesome. If you’re like me and have projects to get done, you’re probably limited to watching a handful of the video recordings.
The International Monetary Fund’s World Economic Outlook was part of the opening statement from the World Economic Forum this week. It highlighted their growth projections for the next two years.
In that forecast, the advanced economies like the US and Europe are expected to grow by 1.6% this year and next. The emerging and developing market economies are expected to grow by an average of 4.4% this year and 4.6% next year.
The big talk is about a slowdown in China. But frankly, it’s hard to see 6% growth, down from 6.1% growth in the Chinese economy as a slowdown. 6% growth of an economy that’s almost the size of the US economy is still massive growth. That’s 735 billion dollars of growth. Just the growth in China next year is larger than all of Spain’s GDP. It’s larger than all of Austria’s economy. It’s larger than Portugal, Hungary, Serbia, Bulgaria and Croatia and the Czech Republic combined. Here’s the kicker. China’s growth alone is larger than the entire Argentinian economy.
We’re conditioned to think historically of Russia and the US as the two global Superpowers. That was certainly the case for the second half of the last century.
That’s no longer the case. China dwarfs Russia and all of the former Soviet republics.
The US economy is the largest, followed by Europe, and then China. The other emerging market economies of Brazil, Argentina, India, and Russia are a rounding error by comparison.
Gita Gopinath is the director for the research department at the IMF who issued the forecast. In her update she said that the risks to the global economy have reduced in the past quarter. The two major risks were US China trade, and the risk of a no-deal Brexit.
The biggest downward revision of 0.1% in the global economic forecast comes from a slowdown principally in India.
Gita sees the US China phase 1 deal as offering a bright light. Risks remain to the downside according to the IMF.
I bring the World Economic Forum to your attention because it’s an event where some of the most influential people in the world come together for a week. There are the prepared statements which often are not that impactful. What I do find useful is to hear the questions.
Some of the panel discussions are taking questions from the Internet, not just from the attendees in the room.
By participating in the World Economic Forum even from an armchair vantage point, I feel more strongly connected to the major forces that are shaping our world.
I get to see the spectrum of political opinions directly, and not through the lens of the news media’s interpretation of what was said. I’m a huge believer in bypassing the intermediary and going directly to the source.