An in-depth version of this article was originally published on Rosa and Roubini Associates
GDP can often be a misleading measurement, and a year can sometimes be a misleadingly short period of time to measure. A review of a past year’s GDP growth trends may nevertheless serve as a useful starting point for understanding the world’s markets. Carrying out such an exercise in economic hindsight for 2019, we might settle upon the following list of approximate growth trends:
- Slowing growth occurred in all major regions and countries Global growth in 2019 was estimated to have been 3%, down from approximately 3.5% in recent years. This trend also held at both the regional and national levels. Regionally, North America, Europe, and Northeast Asia all faced slowing growth. Euro Area growth slowed from 1.8% during 2018 to 1.2% in 2019; US growth slowed from 2.8% to 2.2%; China’s growth slowed from an estimated 6.6% to 6.2%. (Elsewhere in Northeast Asia, Japan’s growth remained low at around 1% and South Korea’s slowed from 2.6 to 1.8%). No major country saw an increase in its growth rate, except perhaps a slight increase in Japan’s.
- America, China, and South Asia provided most of global growth
With European and Japanese growth little greater than 1%, and with many commodity-exporting economies struggling too, global growth was carried mainly by the United States, China, and to a lesser extent India and other countries in southern Asia. US growth was estimated at 2.2 percent, which given its size (roughly 25% of global GDP), and the slow growth of global economy, is still a substantial portion of the world’s total growth this year. China’s 6.2% growth (assuming this figure is accurate) is even more substantial. India, meanwhile, which is only around 3% of global GDP in nominal terms (7.5% in purchasing power parity-adjusted terms), experienced 4.9% growth this year. Other smaller South Asian economies grew even more quickly, such as Bangladesh (7.7%), Vietnam (6.5%), Indonesia (5.1%) and the Philippines (5.7%). Thailand, however, which is by far the largest economy in Southeast Asia apart from Indonesia, grew only 2.4%.
- Europe continued to struggle – and not just in the European Union
The EU’s growth in 2019 is estimated to have been below 1.5%. The Euro Area’s growth was even lower than that, because unlike the European Union it does not include the faster-growing East European economies, notably Poland and Romania with 4% growth and Hungary 4.6% growth. Even outside the EU growth was slow, however. Russia’s growth this year was only an estimated 1.1%, down from 2.3% in 2018. Norway’s was 1%; Switzerland’s 0.8%. Britain’s was 1.2% (that is, assuming you consider Britain as outside the EU). And Turkey’s GDP, after growing at 2.5% in 2018, did not grow at all in 2019.
- Central Europe in particular experienced slow growth
Perhaps the most notable regional trend in Europe was the slow growth within Central Europe, most notably in the Germany-Switzerland-Italy corridor of nations. Germany and Italy had by far the slowest growth among G7 economies: Germany grew at 0.5% (down from 1.4% in 2018), Italy grew at 0.2% (down from 0.8% in 2018). Most countries around them also had slow growth: France 1.3%, Belgium 1.3%, Sweden 1.3%, Austria 1.5%, the Netherlands 1.7%, Switzerland 0.8%. Even the Czech and Slovak economies slowed, to around 2.5%, down from the 3-4% range they had grown at in previous years. The Central European slowdown was probably the dominant trend in the EU in 2019. The previous dominant trend, namely Southern Europe’s slow growth, did not disappear (Italy, after all, still struggled) but it was eclipsed. Spain’s economy grew at 2.1%, Greece 1.9%.
- Europe’s North-South dynamic has become more complicated There is no longer any clear divide between a sluggish South and nimble North, either within the EU, the Euro Area, or Europe more broadly defined. At all three levels, the fastest and slowest major economies in 2019 were both Southern states: Spain was the fastest, Italy the slowest. Northern Europe was divided too: major economies such as Germany, Britain, Russia, and Scandinavia (ex-Denmark) grew slowly, while others like Poland, Ireland, and to a lesser extent the Dutch and Danes grew quickly. In the ex-EU Mediterranean region there were divides too: Turkey did not grow, but the Levant grew quickly (Israel 3.2%, Egypt 5.6% for e.g.). In the Maghreb, Morocco grew at 2.5%, Algeria 2.6%.
- Latin America had a rough year… Venezuela remained in crisis, and Argentina experienced a recession in which its GDP shrank by an estimated 3.3% in 2019. The two largest economies, Brazil and Mexico, grew at just 0.8% and 0.1%, respectively. The Pacific economies that had previously been strong, such as Chile and Peru (both significant commodity exporters), slowed as well. Chile grew by 1.8%, Peru 2.6%. Colombia’s growth did rise however, from 2.6% to 3.1%.
- …so did the Anglosphere The Anglosphere is a tricky group to define. Arguably it is does not even warrant being considered as a group to begin with. Even for those who do think the concept is useful, it is difficult to know which countries it should include. Certainly, it includes countries like Britain, Canada, Australia, and New Zealand. More broadly, it could perhaps also be used to include economies such as Singapore, Hong Kong, South Africa and/or Nigeria. Wherever you do decide to draw the Anglosphere’s lines, the group had a year of slow growth. Britain grew at 1.2%; Canada and Australia at 1.6%. Singapore grew at just 0.8%; Hong Kong actually shrank by 0.3%. South Africa grew by 0.6% and Nigeria (starting at a lower income base) grew by 2.2%. Jamaica grew at 1%. Only New Zealand and Ireland had strong growth, at 2.5% and 4.2%. Ireland’s growth slowed too though, from 6.7% in 2018.
- East Africa grew quickly, but Africa in general did not
Rwanda may have led all countries in 2019, with 7.8% growth. Ethiopia may have led among all large developing countries, with 7.4% growth. Uganda, Kenya, and Egypt all grew between 5-6%. There were high growth numbers in some other parts of Africa too, but in the largest regional economies, such as South Africa, Nigeria, Angola, and Algeria, growth was slow. Nearby in the Middle East, the Gulf Arab states’ GDP stalled and Iran’s shrank.
- In North America, the US kept ahead of Canada and Mexico US growth was 2.2% in 2019, compared to an estimated 1.6% in Canada and 0.1% in Mexico. This is the second year in a row that the US grew the fastest of the three. Before then, not since the 2009 recession did the US do so. And before then, not since 1999 was US growth the fastest. (The US grew at 4.7% in 1999, more than double its current pace). In contrast, as recently as 2014 the US grew slower than both Canada and Mexico.
- In America and China both, heartlands outgrew coastlands Unlike in the previous two years, US growth in 2019 seems to have occurred at a faster pace in the centre of the country – in the Rockies, the Greater Midwest, or in certain areas along the Gulf of Mexico – than it did along the eastern or western coasts. In China, somewhat similarly, the interior states in the south-west, centre-west, or central China, such as Yunnan, Jiangxi, Hubei, and Sichuan, grew faster than most of the country’s coastal states. The slowest-growing Chinese region of all was, as it has often been in recent years, the northeast: states like Heilongjiang, Jilin, Liaoning, and Inner Mongolia.