The number one issue is growth
December 18th
2 minute read
Growth is number one
The Americas, South down, North up
Europe, not good, UK worst in world
China fastest, Indonesia second, but big slowdown
Markets now need faster growth
2 minute read
Growth is number one
- For us the biggest issue in the world & here in Indonesia remains economic growth. The problem is that during the last ten years, economic growth has slowed down to an average now of zero.
- Some have wished for zero growth for various reasons, but we can see that the reality is not good. Zero growth means lower real incomes, a higher wealth gap & yes health issues (excess mortality has been rising since 2011 not only recently).
- It’s easy to research global GDP growth on Google which has just now updated to 2020 data. Here’s what it shows.
The Americas, South down, North up
- In terms of methodology, we’ve Googled ‘ [country name] GDP’ (its in $s) then taken data from 2007, 2011, 2015, 2018, 2020 & calculated the average annual growth rate for each of those years up to 2020.
- First in South America, Brazil has not had a great time. Average growth from 2007 is already at 0% & that growth rate declined from there to an average of -12% since 2018, the weakest.
- In the North, the US has done very well & has the second strongest growth rate in the world after China from 2011 of 4% per annum
Europe, not good, UK worst in world
- Over in Europe things have not gone well at all. Emerging Europe in Russia has average growth since 2007 of a just positive 1%. From 2018 this has turned into negative growth at an average -5% rate.
- In old mainland Europe Germany has not fared much better. Average growth there from 2007 is also a small positive 1%. This declined also to negative by 2018, of a -2% annual rate.
- In the UK it’s even worse. Average growth even from 2007 is negative & the worst in the world at -1%. From 2018 average growth is at -2.6%.
China fastest, Indonesia second, but big slowdown
- How about here in Asia? First Japan. Important to remember that Japan has not grown a all in over thirty years… Since 2007 Japan average growth is 1% & also from 2018 it’s 1%, but for the reason above, a bit better than previously but still 30 years of zero to make up.
- China has the fastest average growth, but it has slowed down a lot. From 2007, average growth is fastest at 24%. From 2018 this has slowed to 3%.
- Indonesia is second from 2007 with 11%, but we are at a just positive 0.8% since 2018.
Markets now need faster growth
- The first thing to note is that growth in exporting countries is overstated while importing countries is understated. For this reason we’d almost completely discount China & for this reason the US is by far the strongest growth in the world.
- Second, the total growth has slowed from an average of 5% since 2007 to 0% from 2018 & needs stimulus now from de regulation &’lower tax rates.
- Stock markets have recently been able to rise after collapsing & head even higher because of some inflation. But that’s getting harder. Now we need faster growth to return for stronger future gains.