The eastward shift spells the end of our multi-planet life in the One Planet World.
From The Sunday TimesJanuary 3, 2010
This decade will tip the economy to the east
A new year, a new decade, but what kind of economy? Let me start big and gradually bring it down to size.
The big picture is that the world economy is recovering. That recovery is, however, heavily skewed towards emerging economies such as China, India and Brazil. The International Monetary Fund’s numbers tell the story as well as anybody’s. In 2009 the world economy contracted by 1.1%, the worst performance since the second world war. That was split between a 3.4% drop for advanced economies and a 1.7% rise for the emerging ones.
That gap will be preserved, more or less, during the upturn, so the IMF expects global growth of 3.1% this year, split between a modest 1.3% expansion in advanced countries and 5.1% growth in the emerging world.
Just as advanced economies were hit harder by the financial crisis, so they will be slower to recover. Emerging economies are much better placed. Gerard Lyons of Standard Chartered describes “an arc of growth from China to India and then on to Africa”. Stephen King of HSBC sees the crisis as the “tipping point”, which has made the shift of economic power from west to east irreversible.
One way of looking at this is by comparing the performance of the “E7” — China, India, Brazil, Russia, Mexico, Indonesia and Turkey — with that of the more familiar G7 (America, Japan, Germany, Britain, France, Italy and Canada).
We start this decade with the combined gross domestic product of the G7 comfortably ahead of that of the E7. By the end of it, according to John Hawksworth of Price Waterhouse Coopers, the E7 will be in the ascendancy.
“The shift in global economic power is not just reflected in GDP,” he points out. “The G7 has already given way to the G20 as the key forum for global economic decision-making, while it was the G2 [America and China] that took the lead in the Copenhagen climate-change talks.”
That is the big story, for this year and many years to come. We should not, however, confuse the relative and the absolute. Britain was displaced by America as the world’s leading economy long ago but that did not stop our living standards continuing to rise, and at an accelerating pace…………….
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