Two Numbers: Bought by China

Two numbers
Simon Briscoe

My two numbers this week are 62 and 78.

The economic output of the world was valued at $62 trillion in 2008, the year before recession struck in the wake of the financial crisis. In 2014 it will be about $78 trillion.

This is a 26% increase in the size of the world's economic cake – or 33% from the low point recorded in 2009.

These are salutary figures for the West. The likes of the US, Germany and the UK have struggled to grow by 10-20% over the period. Yet, despite the worst financial crisis since the 1930s and the only year of global economic contraction since the Second World War, the output of China, among other countries, has more than doubled over the same period. While some of the increase is accounted for by inflation, most of the rise reflects economic growth. China and many other newly industrialised countries are no longer just exporting to the old members of the Organisation for Economic Co-operation and Development, but are producing for their own markets and those in other developing countries.

This trend will see the dominance of the West decline but augurs well for the balance of the world's economy as the developing countries could no longer rely on getting their growth by exporting to debt-laden countries in the West.