 Global Economic Growth and Trade in 2010
(New Zealand) - January 2010
The global economy contracted 2.2 per cent in 2009, but the World Bank is forecasting economic growth of 2.7 per cent in 2010, and a further 3.2 per cent for the following year. Both the U.S and Europe have pulled out of recession and the major emerging markets are continuing to expand rapidly.
Developing countries will see high growth rates, at a combined 5.2 per cent in 2010, but progress for many will be hampered by limited investment. Growth will come more slowly for developed countries, at a combined 1.8 per cent, as the result of fragile employment and financial markets.
In the U.S, economic growth is projected at 2.5 percent in 2010, and 2.7 per cent in 2011. But, European countries will take longer to recover with expansion of only 1 per cent. New Zealand should fare better and is tipped to achieve 1.8 per cent growth.
On a positive note for New Zealand, whose economic fortunes are closely entwined with those across the Tasman, Australia is entering 2010 in a much healthier state than most developed markets and is well positioned to benefit from the global recovery. Conversely, countries tied to the U.S economy are expected to suffer the effects of depressed consumer demand.
The biggest story of the year had to be 'China', which edged past Germany to become the world's largest exporter. Following widespread factory closures, China's exports rebounded in December, up 17.7 per cent after 13 months in decline, and the upturn was vital for Chinese exporters following an all time low. The manufacturing powerhouse achieved economic growth of 8.4 per cent in 2009, and the government is forecasting further expansion of 8.3 per cent in 2010.
Currently the world's third largest economy, behind Japan and the U.S, China is expected to unseat its nearest rival within the next 12 months. Its accelerated rise through world rankings is due in part to a NZ$586 billion government stimulus package, which helped stabalise the country's economy and consumption while other markets struggled with the recession.
China's trade surplus shrank by 34.2 per cent in 2009, which reflected higher demand for imported raw materials and consumer goods. A spending spree that economists say is driven by efforts to stockpile goods such as iron and oil while global prices are low.
The U.S and other governments continue to protest that China's currency is undervalued and has remained frozen since 2008, in what economists describe as an effort to keep its exporters competitive. As a result, the U.S has imposed anti-dumping duties on Chinese made steel and other goods, while the European Union has imposed curbs on Chinese footwear.
Overall, 2010 looks relatively promising for many countries, aside from the fact that government stimulus packages underpinned much of the economic growth recorded in 2009. Credit agency, Dan & Bradstreet, warns that this artificial stimulus needs to be replaced by private demand if economies are to continue of their current trajectory.
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