Changing World Wide Economic Tremds that we need to heed


Qatar : The Wor ld’s Fastest Grow ing Economy
You probably know that growth in the West will be miniscule, and that China and I ndia will lead in Asia - but did you know that global economic growth in 2010 will be led by Qatar, Botswana, Azerbaijan and Congo?

Although Australia was confident enough to raise its interest rates last week - the first G20 nation to do so - and although we have previously lauded Canada as the best run advanced economy in the world, these two count ries have been saved a big cont ract ion thanks both to rest rained banking systems and st rong commodit ies exports. They both, however, are badly affected by property prices falling and the fragility of the western financial markets of which they are an integral party.

It is probably also not a surprise to learn that in the latest Reuters Poll of economists, China and I ndia were forecast to lead the Asian recovery in 2010. The forecast for China has been raised to 9 per cent and I ndia to 7.5 per cent . Singapore is expected to ride a recovery in exports to be the third fastest growing economy in Asia at 5.7 per cent , with Taiwan and Korea also gaining. The lat ter is expected to be the second G20 count ry to raise interest rates, while I ndia’s RBI , worried that the Consumer Price I ndex is creeping back up to 12 per cent inflat ion, is also like to raise rates.

What may be more surprising to many readers is to see who is expected to lead the growth charts for the world in 2010.

Before sharing these figures, let us first state that they are slight ly out of date. These figures come from the IMF’s World Economic Out look released in July 2009. However that only means that the forecasts are understated, since almost all growth forecasts have been raised since then. No new forecasts have been published for some of the smaller nat ions shown here, so we will use this as a baseline.

Here is the forecast for the Top 12 Fastest Growth Economies in 2010, taken from IMF figures and tabulated in EconomyWatch.com’s Economic Stat ist ics Database: Fascinat ing, isn’t it?

Only one of the top 12 is a G20 nat ion. We all know that China is a high-growth country. I ndeed, if you just read the press you might be forgiven for thinking that China is the fastest growing count ry in the world, or indeed the only high growth country. That is simply not t rue. Many count ries have been growing faster than it has over the last decade.

Qatar is also expected to lead economic growth tables for 2009 at an even faster clip of 17.98%, it led world economic growth in 2008 at 16.39%. Azerbaijan led 2007 economic growth like a rocket , with a 23.38% figure and it also scorched 2006 economic growth clocking an amazing 30.55% GDP growth stat .

Indeed if you look at recent years, count ries like Qatar, Azerbaijan, Turkmenistan and Angola have consistent ly joined or beaten China at the top of the growth pile, while in recent years Timor Leste, Afghanistan, Iraq, Rwanda, Congo, Equatorial Guinea and Malawi have regularly featured.

In Ghana is expected to lead world economic growth at 16.78%, followed by Angola and Liberia. In 2012 it is the turn of Mauritania, Liberia and Niger to lead growth.

So what can we learn from these t rends? What gives? Let ’s look at the key points. In examining these t rends, remember always the maxim that our Chief Polit ical Economist, David Caploe PhD expounds: in the st ructure of the world economy, count ries either export to the US, or they export to count ries that export to the US.

1. The insatiable demand for energy. That has been the big story for much of this decade. A higher standard of living, cheaper internat ional t ravel, and the proliferat ion of elect ronic gadgets in the western world leads to ever higher per-person energy consumpt ion in advanced economies. As massive count ries like China, I ndia and I ndonesia grow; their cit izens become richer and aspire to the same lifestyle, leading to ever greater energy needs. Count ries like Qatar, with the world’s largest natural gas reserves, and Azerbaijan with its vast oil fields, have boomed as a result .
    
2. 2010 - 2020 will be the African Decade. I n economic terms, Africa has long been written ten off as a basket case of corrupt ion, war and poverty. But things are changing. Bet ter governance is emerging, part icularly in count ries like Ghana, mobile telephony is helping to bring remote areas into the modern era, and the Chinese are helping to build modern infrast ructure in return for - you guessed it - energy and commodit ies. (So China grows by export ing to the US, and much of Asia and Africa is growing by export ing to China and similar ’primary’ exporters) .
    
3. The economic bonanza of peace. Count ries who export arms (chief among those being the US) have an economic benefit in war, but the count ries themselves, and those who t rade with them, witness enormous gains from reconst ruct ion and development following war. I t happened in Europe after World War I I and the Marshall Plan, and it is happening now in count ries like I raq, Afghanistan, East Timor and Rwanda. Let us hope that economic growth can help keep the peace in those count ries.
    
4. When you start from a lower base you can grow more. This naturally helps count ries in Africa and Cent ral Asia, and it has helped China which st ill has large underdeveloped inland provinces, although the law of diminishing returns will soon hit the Middle Kingdom.
    
5. Populat ion growth. These are count ries with amongst the highest rates of populat ion growth in the world, further boost ing economic growth. As they become more prosperous - Let us plan to get our share of the Pie.