The OECD has released its estimates for growth in the major economies for 2009. Robust growth of 6% to 8% is seen in China and India. Less, but still good growth for Indonesia, while Russia, Brazil, and South Africa are less than robust, but still growing. Australia and Turkey are growing, but even less than the others.
For most of Europe, the United States and New Zealand, it is recession. Mexico, Spain and Scandinavia are expected to produce near zero growth. Iceland, the tiny dark blue dot in the north Atlantic, is projected to have a -9.335% drop in GDP.
OECD Visualization of World Growth for 2009
The table below details the specifics of GDP projections for many countries.
Almost all of the largest economies and some of the smaller ones, have growth stimulus packages in place or on the table. This will help keep the recessions from going deeper in the red, especially if they all are implemented at roughly the same time.
If one country increases government spending is a stimulus program, then there will be an expected positive addition to GDP. But, some of that growth will be exported to their trading partners. For example, if the U.S. were to enact a stimulus program by itself, it would lose some of the growth to imports from Mexico, Canada and China. But, if all four countries enact similar programs at the same time, there will be an even larger expansion in all countries. The mathematics of this are somewhat complex, and they lack definitive precision. But, the modeling that is used by economists are well tested over decades of experience. Mr. Obama's economic team will be using this type of modeling in order to determine how large a stimulus is needed to grow our economy out of the recession.
One variable not tested in this type of modeling, however, is how the credit markets will accommodate simultaneous borrowing by many countries at the same time. Is there enough world demand for debt to buy all the bonds that would be issued with the huge influx that would come from simultaneous borrowing? I don't know the answer to this question, but it does seem to me to point to some limits on the ability of the world economy to engage in large-scale borrowing at the same time.
On the positive side, China is able to buy $2 trillion itself, out of current reserves. If they stay positive in their trade balance, then they could buy even greater quantities next year. There is still plenty of international credit available, even if the large banks are dried up for now.
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