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US’s influence on global growth set to diminish
by David Harrison,
2016-03-09 12:07:08.0
THE US is once more a key driver of global growth but its influence is still not as pronounced as it was 20 years ago — and it could well begin to fade in the coming years.
Data provided by the World Bank show that the US accounted for an estimated 0.6 percentage points of the world’s 2.4% growth rate in 2015, or roughly 23%. That is the largest US contribution since the recession.
But before we start crowning the US the world’s once-and-future driver of growth, it makes sense to check out the situation in the late 1990s. Back then, the US routinely contributed more than one percentage point to the global-growth rate. In percentage terms, the US contributed 28.3% of the world’s growth in 1996, 29.6% in 1997 and a whopping 47% in 1998, when many Asian countries were muddling through a financial crisis.
Those days are not likely to come again. China and other emerging markets grew at breakneck pace during the 2000s and early 2010s, a time when the US and Europe were struggling with the effect of their own financial crises. Even in 2009, as developed economies were in the throes of a recession, China represented a positive contribution to global growth. In 2013, China single-handedly accounted for almost one-third of the world’s growth.
These days, China is going through a rocky transition from an export-driven economy to one driven by domestic consumption of services. Other emerging markets are also suffering because of their reliance on trade with China. That has caused Chinese and emerging-market growth to slow. Their contributions to global growth have also dropped.
Over the next three years, the World Bank expects global growth to hover around 3%. The US contribution is expected to contribute almost 20.9% of that growth this year, dropping to 17.4% in 2017 and 15.7% in 2018. China’s contribution is expected to drop from 27.6% in 2016 to 26.4% in 2018.
Other countries will be taking their place. The rest of the world, excluding the US, China and the eurozone, will account for half the world’s growth by 2018. The US may be the world’s growth engine for now, but it will not be forever.
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Picture: THINKSTOCK
THE US is once more a key driver of global growth but its influence is still not as pronounced as it was 20 years ago — and it could well begin to fade in the coming years.
Data provided by the World Bank show that the US accounted for an estimated 0.6 percentage points of the world’s 2.4% growth rate in 2015, or roughly 23%. That is the largest US contribution since the recession.
But before we start crowning the US the world’s once-and-future driver of growth, it makes sense to check out the situation in the late 1990s. Back then, the US routinely contributed more than one percentage point to the global-growth rate. In percentage terms, the US contributed 28.3% of the world’s growth in 1996, 29.6% in 1997 and a whopping 47% in 1998, when many Asian countries were muddling through a financial crisis.
Those days are not likely to come again. China and other emerging markets grew at breakneck pace during the 2000s and early 2010s, a time when the US and Europe were struggling with the effect of their own financial crises. Even in 2009, as developed economies were in the throes of a recession, China represented a positive contribution to global growth. In 2013, China single-handedly accounted for almost one-third of the world’s growth.
These days, China is going through a rocky transition from an export-driven economy to one driven by domestic consumption of services. Other emerging markets are also suffering because of their reliance on trade with China. That has caused Chinese and emerging-market growth to slow. Their contributions to global growth have also dropped.
Over the next three years, the World Bank expects global growth to hover around 3%. The US contribution is expected to contribute almost 20.9% of that growth this year, dropping to 17.4% in 2017 and 15.7% in 2018. China’s contribution is expected to drop from 27.6% in 2016 to 26.4% in 2018.
Other countries will be taking their place. The rest of the world, excluding the US, China and the eurozone, will account for half the world’s growth by 2018. The US may be the world’s growth engine for now, but it will not be forever.
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