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Members of D.A. Davidson & Co.

There hasn't been a single year this decade in which global growth fell below 3%

“Global growth has averaged 3.7% since the end of the recession in mid-2009, which is actually slightly faster than the 3.6% average in the 30 years to 2008. And there has not been a single year this decade in which global growth fell below 3%. 


How could this have happened, given that growth in Europe, the United States, and China has slowed since the crisis? The explanation is simple arithmetic: China and other emerging economies now make up a much larger share of the global economy than in previous decades. Their increasing dominance creates a base effect that outweighs the slowdown in their national growth rates. For example, China’s GDP growth of 6.5% last year, from a base of $14 trillion, contributed twice as much to the increase in global output as in 2007, when its economy grew by 14% from a base of $3.5 trillion. 


This calculation is not just a statistical oddity. Robust and steady GDP growth has been reflected in growing global demand for commodities, energy, and real goods and services, which in turn has translated into robust and steadily growing corporate profits." 


(Goldilocks Growth dated 04/29/2019 by Anatole Kaletsky, Chief Economist & Co-Chairman of Gavekal Dragonomics, author, and former columnist at the Times of London, the International New York Times and the Financial Times)


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