I decided to take a break from moaning this week in order to look at some data. The data is meant to capture the growth of the world economy and its various parts. The International Monetary Fund loves to gather and present data. Normally, we all get to see the data when they present their World Economic Outlook reports in May and November. During the year, however, they often present updates. I found updates to world economic growth as of July 2019. These are presented in the table below.
You might say that the world economy is fine so long as you are not a duck. That doesn't make any sense so we might say the world economy is fine so long as you love being unemployed and/or don't like being hassled by things like customers. In fact, the world economy real stinks.
I took from the IMF dating measuring the real GDP growth of the world and various regions and countries. The first column in the table shows the actual growth rates in 2018. Since we are in the middle of 2019, I ignored that year. The second column shows the IMF projections for 2020 as of about a month ago, in July. As in all forecasts or projections, the future may turn out to differ from the projections today. But it is interesting to see what they are saying about the future today.
Notice that when you average all the countries of the world, the story is not too bad. The IMF expects world economic growth to stay about the same -- though technically we see a decline from 3.6% to 3.5% from 2018 to 2020. When compared to past years, this 3.5% is definitely below the usual outcomes. But on the positive side, while growth is slowing in most places, the IMF is not predicting a contraction in output in any of them. In other words, they are not forecasting a recession.
The US stands out in the table in going from 2.9% to 1.9%. That 1% decline in growth amounts to a 35% reduction in 2020 relative to growth in 2018.
Comparing future US economic growth to the other 17 places places listed in the table, only four countries/areas (Germany, India, Latin America & the Caribbean, and the Middle East, North Africa, etc.) are expected to grow faster in 2020 compared to 2018.
The remaining countries in the table are expected to decline (or stay the same) in terms of real GDP growth in 2020 compared to 2018. That's pretty special and deserves at least one JD toast.
While the 34.5% decline in the USA is impressive, Japan's growth is expected to shrink by about 50%. Economic growth in Russia, Spain, the Euro Area, Emerging Europe, France, and Italy are all expected to shrink by double-digit percentage changes. Smaller but still negative declines are expected for China, Mexico, and the Group of ASEAN countries.
Projections like these can be important to expectations, the least of which today result in low inflation and interest rates. As we go through the remaining months of 2019, it will be very interesting to see how this global picture changes.
| Actual | Projection | Diff | Diff % | |
| 2018 | 2020 | Change | ||
| World | 3.6 | 3.5 | -0.1 | -2.8 |
| US | 2.9 | 1.9 | -1.0 | -34.5 |
| Euro Area | 1.9 | 1.6 | -0.3 | -15.8 |
| Germany | 1.4 | 1.7 | 0.3 | 21.4 |
| France | 1.7 | 1.4 | -0.3 | -17.6 |
| Italy | 0.9 | 0.8 | -0.1 | -11.1 |
| Spain | 2.6 | 1.9 | -0.7 | -26.9 |
| Japan | 0.8 | 0.4 | -0.4 | -50.0 |
| UK | 1.4 | 1.4 | 0.0 | 0.0 |
| Canada | 1.9 | 1.9 | 0.0 | 0.0 |
| Russia | 2.3 | 1.9 | -0.4 | -17.4 |
| China | 6.6 | 6.0 | -0.6 | -9.1 |
| India | 6.8 | 7.2 | 0.4 | 5.9 |
| ASEAN | 5.2 | 5.1 | -0.1 | -1.9 |
| Emerging Europe | 2.6 | 2.3 | -0.3 | -11.5 |
| Latin Am & Caribb | 1.0 | 2.3 | 1.3 | 130.0 |
| Middle East, N. Africa, etc | 1.6 | 3.0 | 1.4 | 87.5 |
| Mexico | 2.0 | 1.9 | -0.1 | -5.0 |
| https://www.imf.org/ en/Publications/WEO/Issues/2019/07/18/WEOupdateJuly2019 |
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