China and U.S. still generating >50% of Real GDP growth
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
According to forecasts from earlier this year by the World Bank, the global economy is expected to average a Real GDP growth rate of 2.8% between 2017-2019.
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But where will this growth actually happen? Is it in giant countries that are growing at a stable 2% clip, or is it occurring in the smaller emerging markets where 8% growth is not uncommon?
Today’s chart looks at individual countries between 2017-2019, based on their individual growth projections from the World Bank, to see where new wealth is being created.
China Still Tops
Even though growth has slowed in China somewhat, the World Bank still estimates its economy to expand at a 6.5% clip this year, and 6.3% in both 2018 and 2019.
Add these numbers onto the world’s second biggest economy (and the biggest in PPP terms), and you have an incredible amount of growth. In fact, about 35.2% of global GDP growth will come from China over this period of time, putting the country’s economic output $2.3 trillion higher.
Uncertainty in the U.S.
While the U.S. is also expected to contribute a significant portion of global growth, the World Bank had a fairly ominous caveat to their projections over coming years.
The U.S. forecasts do not incorporate the effect of policy proposals by the new U.S. administration, as their overall scope and ultimate form are still uncertain.
– World Bank, Global Outlook Summary
That said, the World Bank does also mention that the tax cuts proposed by the Trump administration could theoretically bump up U.S. and global growth if implemented. However, with all of the chaos in the current U.S. political environment, the tax cuts have been delayed for now – and some analysts are scaling back the chances of them even happening at all.
Other Growth Hotbeds
Beyond the usual suspects of China, India, the Eurozone, and the U.S., it is interesting to see Indonesia as the next biggest bright spot using this type of analysis.
In fact, the world’s fourth most populous nation will account for 2.5% of global GDP growth over the aforementioned time period, adding another $160 billion to its $941 billion GDP. The World Bank projects growth for the country at 5.3% this year, and 5.5% for the next two years.
The other countries that registered as providing 1% or more of global growth?
They include: South Korea (2.0%), Australia (1.8%), Canada (1.7%), UK (1.6%), Japan (1.5%), Brazil (1.2%), Turkey (1.2%), Mexico (1.2%), Russia (1.0%), and Iran (1.0%).
Correction: A previous version of the chart was incorrectly labeled “EU”. That portion of the tree map has been updated to Euro Zone.
Article by Jeff Desjardins, Visual Capitalist