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Economic growth shifting to developed economies

NEW YORK, Aug. 12 (UPI) -- A new report shows global economic growth is shifting its base from emerging countries, like China, to developed nations, like the United States.

Some emerging economies are still growing at rates that are envied by others, but their rates of growth are slowing, while the recovery in the United States, Europe and Japan is picking up steam, The Wall Street Journal reported Monday.

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A report from the world's largest hedge fund, Bridgewater Associates, estimates 60 percent of the $2.4 trillion in global economic growth in 2013 will be generated by developed nations.

The U.S. gross domestic product is plodding along at a rate of about 2 percent and that is projected to slowly rise. The eurozone's economy is expected to show recession-ending growth in the second quarter. In Japan, years of stagnation have yielded to expectations of a GDP of 2.6 percent for the year.

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For some of the world's largest companies, the shift is dramatic, as many expected growth in the Chinese market, for example, to provide critical revenue.

Global demand has "slowed down to a much greater degree than we had anticipated," said Richard White, chief executive officer of Flexible Steel Lacing Co., a company based in Illinois that makes industrial-purpose conveyor belts used in mines and factories.

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"The root cause seems to be China. The demand that they had going -- the need for iron ore, copper and coal -- was driving mining activity in Australia, South Africa and South America," White said.

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Meanwhile, foreign investment could shift its emphasis back to developed nations, while economies sputter in Brazil and Russia and slow down in India and China, the Journal said.

Emerging nations have lead the global recovery since 2007, but the pay off is not developing. Gains in Japan have come with a sharply reduced currency value, which makes imports more expensive. The average U.S. consumer is focused on housing, not imports, for which demand has only risen modestly. And demand from Europe has not yet had a chance to recover.

The International Monetary Fund expects global economic growth to reach 3.3 percent this year, up from 3.2 percent in 2012.

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In China, growth is expected to reach slow to under 7.5 percent, which would be the slowest it has grown since 1990. In Brazil, the economy grew 7.5 percent in 2010 and 1 percent in 2012, the Journal reported.

"We can't ride on the coattails of the West. Asia has become too big," said Frederic Neumann, co-head of Asian economics for HSBC Holdings.

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