World Economies Recover: China, India, Canada
1. Dec. 12 (Bloomberg) -- China’s industrial production jumped, exports fell the least in 13 months and imports surged in November as rebounding trade with Asian nations underscored the region’s role in leading the world recovery. Factory output climbed 19.2 percent from a year earlier, the statistics bureau said in Beijing yesterday. Exports slid 1.2 percent, the smallest drop in 13 months, and imports surged 26.7 percent, a separate report showed.
2. MUMBAI: India has overcome the worst of economic slowdown and may clock 6.5 per cent growth this fiscal on the back of robust industrial performance and positive macroeconomic indicators, the Economic Intelligence Unit said.
"We expect real GDP growth in 2009-10 to average 6.5 per cent from the earlier 5.8 per cent, with an upside risk," EIU Director (Research) Manoj Vohra told reporters here. The strong performance of industrial production and other macroeconomic indicators in recent months lead us to believe that the worst of the economic slowdown in India is now over, Vohra said, adding that there would now be a gradual upward movement.
3. TORONTO -- Canada posted its first trade surplus in 4 months, courtesy of higher gold sales, strong energy exports, and demand from an unlikely source: McDonald's. Stronger gold and energy prices accounted for much of the swing into a $428-million surplus in October from a month-earlier deficit of $850-million.
Other contributors, though, came from unexpected quarters. Canola exports rocketed 48 per cent in the month.Why the sudden demand for canola?
“We're seeing a large increase from the food service industry, at some of the big chains like McDonalds … which are moving away from trans fats,” said JoAnne Buth, Winnipeg-based president of the Canola Council of Canada.
8 Comments:
From articles yesterday and today:
Credit Suisse today raised its forecast for U.S. gross domestic product this quarter to a gain of 4.5 percent at an annual rate. Stockpiles alone will contribute almost 3 percentage points to growth, Feldman said. “We’ve had a very abrupt swing in inventories," said Feldman.
The U.S. trade gap shrank 7.6 percent to $32.9 billion. The bigger drop in imports than exports in 2009 could cut the trade gap almost in half from last year's $696 billion. The deficit totaled nearly $304 billion through October versus $611 billion in the same period in 2008.
U.S. exports jumped 2.6 percent to $136.8 billion, led by increased shipments of civilian aircraft, semiconductors and other capital goods. Foreign demand for U.S. pharmaceutical products and other consumer goods also was higher.
Meanwhile, U.S. imports grew a bare 0.4 percent to $169.8 billion. Increased shipments of capital goods and consumer goods were almost completely offset by reduced demand for industrial supplies and materials.
The closely watched U.S. trade deficit with China widened in October to $22.7 billion, the highest since November 2008.
U.S. exports to China rose to a record $6.9 billion, but were still swamped by the highest imports from the Asian giant since October 2008.
Slow Growth and High Unemployment for U.S. in 2010
December 9, 2009
The UCLA Anderson Forecast group:
"We forecast that after growing at 2.8 percent in the most recent and current quarters, real GDP growth will settle into a 2 percent growth path for much of 2010 and be closer to 3 percent in 2011," the forecasting unit said in its report.
"With such sluggish growth, the unemployment rate will likely peak at 10.5 percent in the first quarter and remain at or above 10 percent for almost all of next year," the closely watched report added."
Lower unemployment and more normal growth of 3 percent to 4 percent will return by mid-decade."
My comment: The report may be a little too optimistic (in part, because the higher level of growth this quarter may be offset early next year). Real GDP growth over the next decade may be 1% below trend growth. I stated before:
"A 1% per year difference in real GDP growth makes a big difference over and after 10 or 20 years. A 2% real GDP growth rate will increase real GDP from $14 trillion to $17.1 trillion in 10 years. However, a 3% real growth rate will increase real GDP to $18.8 trillion after 10 years, or a difference of $1.7 trillion after 10 years. The difference is about $4 1/2 trillion after 20 years."
I bet those countries didn't go on a statist spending spree....
Credit Suisse today raised its forecast for U.S. gross domestic product this quarter to a gain of 4.5 percent at an annual rate. Stockpiles alone will contribute almost 3 percentage points to growth,
Such is the folly of using GDP as a proxy for economic growth. Case in point: higher unsold inventories are a good thing and the unwillingness or inability of consumers to buy goods from abroad is a positive!
We need to spend another trillion dollars on a military adventure and do a tax cut to get the country moving again.
The US government spending increased by almost $1 trillion in 2009 vs. 2008, and will be at a similar level in 2010 (and forever after). The US GDP is about $14 trillion.
So there's about 7% of GDP just due to that increase. Anything less than 7% growth in GDP means the rest of the economy decreased.
I'm amazed how many people on even CNBC just completely miss that fact. Not that it doesn't represent real activity, but that is all borrowed money and doesn't represent sustainable activity.
Doesn't shock me that India and China are growing. Their demographics are just so much better than the US.
Using the Keynesian consumption function; Y = C + I + G + NX, Obama's "change" will result in lower levels of C and I and higher levels of G and NX.
There will be less consumption of private goods and private investment with more government expenditures and more net exports (i.e. less imports).
Looking at the IMF revisions to their forecasts for (un)growth in 2009 contained in their successive World Economic Outlooks, there is a distinct regional/bloc dimension to stylised facts.
China and its wider trading region (including HK, Singapore, Korea, Australia, Indonesia) have had their economic growth substantially upwardly revised since April.
The Americas however, whose economic hegemon is the US, is the only world region without one country registering a significant upward revision in growth.
Europe's somewhere in the middle, Africa's a hotchpotch of all sorts, while the Russia/CIS region (including the Baltics) has been the worst hit of all regions, certainly when you compare predictions for 2010-2012 growth made in April 2008 with those the IMF made in October.
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