Well, some big news for the global economy in the New York Times today (8/15/13):
Old Economies Rise as Growing Markets Begin to Falter
“The balance of world economic growth is tipping in another direction,” is Nathaniel Popper’s lead sentence. The text of an accompanying chart summarizes:
In recent years, the so-called BRIC nations–Brazil, Russia, India and China–have been the engines for world economic growth. Now, as growth in these countries is slowing down, the developed economies of Japan, Europe and the United States are picking up the slack.
That certainly sounds like big news–and good news for those “developed economies.” But the piece is curiously short of numbers to back up its sweeping claims.
We learn that “the gross domestic product of the 17-nation euro zone grew at an annualized rate of about 1.2 percent in the second quarter,” and that Brazil has gone from a 7.6 percent growth rate two years ago to a projected 2.3 percent rate this year–though the alert reader will notice that 2.3 percent for a year is better than 1.2 percent for a quarter.
Popper also reports that “analysts are expecting that growth in the United States will rise from less than 2 percent this year to nearly 3 percent next year”–even though GDP forecasts are notoriously inaccurate. We’re told that “in China, the 14.2 percent expansion seen before the peak in 2007 is not likely to be reached again, though the expected growth of 7.5 percent next year is still impressive.”
That is still impressive–and more than twice as big as “nearly 3 percent.” So how is the balance of growth tipping in a different direction? Popper explains that:
Because the developed economies still account for nearly 60 percent of the global economy, even a slower pace of growth can provide more economic activity than faster growth in the developing world.
Oh, OK. So what is the overall growth of the developed world compared to the overall growth of the BRIC countries–you know, the comparison that is the subject of the whole article? Oddly, Popper doesn’t provide these crucial figures, but you can get a general sense of them from the above-mentioned accompanying chart.
And you begin to see why Popper doesn’t include numbers–because they completely contradict his thesis.
Three years ago, BRIC growth (in GDP dollars) totally outstripped that of the U.S., Europe and Japan–roughly $750 billion to more than $2 trillion. (I am eyeballing these numbers from the chart.) Two years ago, the developed world’s growth was closer, but still about half a trillion less. Last year, BRIC growth fell sharply, to a little less than $1 trillion–but developed growth collapsed, actually falling by maybe $200 billion.
This year, growth in the developed world is expected to be maybe $300 billion–again, far less than the more than $1 trillion projected for China and co.
Looking into the future–and again, projections of future GDP are essentially guesses–economists see the developed countries growing nearly but not quite as much as the major developing economies.
If you can work out how those numbers justify a story about “the balance of world economic growth… tipping in another direction”–well, your imaginative skills may be in demand at the New York Times.