Friday, September 15, 2006

The World is Global

As US economic dominance wanes, the world becomes truly multi-polar.

Here are two things the IMF had to say in its World Economic Outlook released yesterday:

  • Global output will rise 5.1 percent this year and 4.9 percent in 2007. Both
    forecasts are 0.2 percentage point higher than the April predictions. This is
    attributed to faster-than- anticipated growth in China, India, the EU and
  • For the US, the 2007 growth forecast is cut to 2.9 percent from 3.3 percent.

Now why are these two facts interesting? Because the above data conceal a staggering revelation. Note that the forecast for the world's economic growth has been raised upwards, while that for the US has been lowered. This means that the rest of the world's economic prospects are now diverging from those of the US. Does this mean that, perhaps for the first time in a century or more, the US has ceased to be the world's economic engine?

Evidently it does. NOt only because of the divergence noted above, but because, as the GDP growth figures above reveal, the US is now lagging the world in economic growth.

This should not come as terribly surprising to anybody who has been following global events for the past 5 years, but nonetheless is noteworthy as this is perhaps the first time there is hard data to this effect.

Is there a Crown Prince?
In 2001, Time magazine ran a feature titled, Who Will Drive... The World Economy? The article examined as the US ceases to be the predominant economy, which countries could lay claim to economic pre-eminence. The article considered Europe and Japan but neither China nor India find so much as a mention**.

And the nation listed in that 2001 article as the biggest potential threat to world economic well-being - Russia - is comfortably ensconced in the IMF's list released yesterday of countries that are chugging cheerfully along!

The best answer to the succession question probably is that there is no "successor" to the US - it's simply a global world now.
**There is a mention of "the developing nations of Asia and Latin America, which depend on foreign capital" though. Perhaps China and India are to be found within that august group?