Daily chart: The gridlocked global economy

by / Friday, 14 August 2015 / Published in Economy

IN 2009, in the middle of the financial crisis, global economic growth fell to zero. China and other emerging-market economies had added exactly as much to global GDP—1.5% in purchasing-power-parity terms—as America and the rest of the rich world had lost. Since the crisis, everyone has lowered their expectations. Global growth has flattened out to just above 3% for the last few years. And the International Monetary Fund’s five-year forecasts of potential growth—or how much economies can expand without overheating—are lower everywhere than they were in the decade before the crisis.The balance between countries has also changed. In the 1980s the United States and the rich world contributed almost twice as much to global GDP growth as China and the developing world. By the 2000s this was reversed. In the years before the crisis, China and the emerging economies were adding up to three times as much to global output each year as rich ones. And in the past five years the gap has narrowed again. The rich world’s contribution to global growth (half of which comes from the United States) has rebounded, albeit to a meagre 1 percentage point. Meanwhile the emerging world’s contribution has sharply fallen, from 4% to 2.5%. All this has dented hopes that emerging economies might prop up global growth. China, by far the biggest single contributor, is showing …
Source: The Economy