Global Economic Indicators

The common belief that newly emerging nations such as India, China and a few South East Asian economies are performing well on the economic front over the past decade is corroborated by the fact that certain economic indicators such as growth rates in per capita Gross Domestic Product (GDP), inflation rates, current account surplus and employment rates have shown favourable patterns.

The global economy is said to be growing as a whole with healthy growth rates hovering around 2% annually. The USA being the largest economy in the world continues to be the leader in terms of technological innovations, low unemployment rates, high per capita GDP and also few numbers below the poverty line. Europe or the “Old World”, as many would call it, is gradually moving towards rapid technological progress and easing government restrictions in various sectors to enable the continent achieve high growth rates. Africa still remains trapped in mass poverty and Latin America have only experienced sporadic instances of decent economic growth. Economies of Australia and New Zealand with sound economic policies are on the path of steady growth. Political stability as a key economic indicator has also ensured that stock indices are at healthy levels in the developing countries.

“Global Economic Indicators” generally mean economic variables or parameters that may determine global economic behaviour over a period of time reflecting the movement of the global economy as a whole. Global Economic indicators can be summarily comprised of the following:

• Real GDP growth rate
• Real GDP per capita
• Exports-Imports
• Balance of Payments
• Inflation Rates
• Unemployment
• People below poverty line (generally standardized as having less than $1 a day)
• Outstanding External Debt, if any, as a percentage of GDP

According to statistics of the World Bank and other International Agencies we have presented a chart showing the different indicators mentioned above for various economies of the world in 2005:

CountriesGDP(billions of US dollars)Per capita GNI(US dollars)Population growth (annual %)GDP growth rate(annual %)Annual inflatio-n rate %Merchandise trade (% of GDP)China2.2 trillion17400.69.93.863.8India785.5 billion7201.48.54.228.2USA12.5 trillion43,74013.52.721.2Brazil794.1 billion34601.32.37.224.7Russia763.7 billion4460-0.56.419.348.5Czech Republic122.3 billion10,710-0.260127South Africa240.2 billion4960-0.74.9549.3Australia700.7 billion32,22012.63.233

Where GNI= Gross National Income

From the above data, it is evident that developing economies such as India and China are experiencing the fastest growth rates in GDP nearing almost 8%-10%. Inflation rates are also kept at manageable levels in these economies. Population has fallen over the year in question for most of the East European nations such as Russia in comparison to India where rise in population levels remains one of the highest at 1.4%. Population growth in China has been kept under control by the governments’ one-child policy. But it should be noted that countries like China and Japan are facing a rapidly ageing population which is putting a pressure on the employable force of the country. One of the striking features of the above study is the slowdown of the US economy which only grew at 2.3 although it still enjoys the highest per capita GDP followed by Australia. Total GDP over the year 2005 is also seen to be the highest for USA. Inflation rates have been kept under control in most of these economies with Russia having the highest at 19.3%. Merchandise trade as a part of GDP is quite high in China and South Africa due to exports of electronic goods and minerals from these two countries respectively.

Some of the success stories of the world have been Chile and Macedonia which are managing their transition stages well. While Chile has experienced growth with price stability, the Balkan nation of Macedonia is surging ahead on the path of globalization with stressing the need for free enterprise overcoming structural bottlenecks such as stagnant growth in GDP and unemployment. It is making steady progress towards getting an EU membership. It should be noted in this context that the EU (European Union) is the largest market in today’s world with unemployment levels down to 7% and the EU as a whole registering growth of about 3%.

But the less noticed economic indices which could bring about rapid economic progress are lack of restrictive government controls, a transparent legal and judiciary system and low tax-rates. The Indian subcontinent is one of the most corrupt places in the world with Finland recently declared the least corrupt country. It should also be noted that new businesses take 71 days to open shop in India.

The sixth Global Information Technology Report prepared by the world Economic Forum as well as French Management School INSEAD shows that information and communications technology like internet and cheap cell-phone service has least penetrated in the newly emerging economies but is the highest in the Nordic and North European countries.

Lastly and most importantly, measuring poverty is the most challenging question and although number of people below poverty has declined in countries like India and China, unless the fruits of globalization are shared by all equally, this menace will continue to haunt all the countries of the world.

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