U.S., Europe Share of Economy to Fall to 49% in 2009, CEBR Says
The U.S., Canada and Europe will generate less than half of global economic output this year as the recession accelerates a shift in wealth toward China and other nations, a research group said.
The three economies will together account for 49.4 percent of the world economy in 2009, the London-based Centre for Economics and Business Research Ltd said today in its quarterly ‘Global Prospects’ publication. That’s down from a range of 60 percent to 64 percent between 1995 and 2004.
The prediction underscores the political dimension of the recession as the governments who wrote the rules of global finance since World War II work more and more with China, Brazil and other emerging countries.
“We had expected this to happen but not quite so soon,” Douglas McWilliams, chief executive of the CEBR, said in a statement. “The West will have to start to get to grips with the fact that we are no longer dominant and cannot expect to have things our own way.”
The consultancy previously expected the share of the so- called Western economies to fall below 50 percent in 2015. Now the CEBR expects its share of output to be 45 percent by 2012.
The transition has already taken on political form as the Group of 20 nations threatens to eclipse the G-7 and the G-8 as the key forum for global decision-making.
Leaders including British Prime Minister Gordon Brown, President Barack Obama and China’s Hu Jintao agreed to overhaul financial rules and give more resources to the International Monetary Fund at the G-20 meeting in London on April 2 easy cash advance.
Overtake
China overtook Germany in 2007 to become the world’s third- largest economy and in September passed Japan as the biggest foreign investor in U.S. government debt. China, Russia, Brazil and India together hold about 41 percent of global foreign- exchange reserves.
Together, the G-7 countries produce only slightly more oil a day than Saudi Arabia.
The world economy will shrink 1.4 percent this year, the first decline since 1946, CEBR predicted. China will recover from the downturn more quickly than other nations, helping it overtake Japan as the world’s second-largest economy, it said.
“The Chinese economy has bounced back rapidly,” CEBR economist Jorg Radeke said. “This will have knock-on effects on oil and commodity prices and is one reason why we are forecasting a price of oil of $80 a barrel in 2012.”
Crude oil for July delivery rose to a seven-month high of $68.29 a barrel in New York today as Chinese manufacturing expanded, signaling that fuel demand in the world’s second- biggest energy consuming country may rise.
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