| Economy | World |
| Prev. Field Next | |
Economy - overview:
      |
In 2011, world output - and per capita income - continued to recover from the 2008-09 recession, the first global downturn since 1946. Gross World Product (GWP) grew 3.7%, a slowdown from the 5.0% rate achieved in 2010. Growth was unevenly distributed: lower income countries - those with per capita incomes below $30,000 per year - averaged 4.1% growth, while higher income countries - with per capita incomes above $30,000 - averaged 2.2% growth. Among large economies, China (+9.5%), Argentina (+8.0%), India (+7.8%), Nigeria (+6.9%), and Turkey (+6.6%) recorded the biggest GDP gains - although all were off the pace they set in 2010. Continuing uncertainties in financial markets slowed growth in Spain (+0.8%), Italy (+0.6%), and Greece (-6.0%), while the tsunami and Fukushima nuclear disaster hit Japan (-0.5%). Growth fell below 2% in both the US and the European Union, in part because of growing concern among consumers and investors about the size of government debt and its impact on the direction of fiscal policy. In 2011, global unemployment continued to creep upwards, reaching 9.1% - underemployment, especially in the developing world, remained much higher. Global gross fixed investment was a bright spot, inching upward 1 percentage point to 24% of GWP, after a significant drop in 2009; direct investment across international borders climbed 7%. World trade grew 20% in 2011, but the pre-2009 pattern of surplus and deficit countries has returned. With the growth of international trade and investment, world external debt rose 7%, reversing a 5% decline in 2010. Many, if not most, countries pursued expansionary monetary and fiscal policies, although at a reduced pace from 2010. The global money supply, narrowly defined, rose 11%, and broadly defined money increased roughly 8%, as central banks continued efforts to keep interest rates low. The global budget deficit was narrowed to roughly $3 trillion - 4.2% of World GDP, as governments tried to rein in spending and slow the rise of public debt.
The international financial crisis of 2008-09 has presented the world economy with a major new challenge, together with several long-standing ones. The fiscal stimulus packages put in place in 2009-11 required most countries to run budget deficits. Treasuries issued new public debt - totaling $6.5 trillion since 2008 - to pay for the additional expenditures. To keep interest rates low, many central banks monetized that debt, injecting large sums of money into the economies. When economic activity picks up, central banks will face the difficult task of containing inflation without raising interest rates so high they snuff out further growth. At the same time, governments will face the difficult task of spurring current growth and employment without saddling their economies with so much debt that they sacrifice long-term growth and financial stability.
Long-standing challenges the world faces are several. The addition of 80 million people each year to an already overcrowded globe is exacerbating the problems of underemployment, pollution, waste-disposal, epidemics, water-shortages, famine, over-fishing of oceans, deforestation, desertification, and depletion of non-renewable resources. The nation-state, as a bedrock economic-political institution, is steadily losing control over international flows of people, goods, funds, and technology. Internally, central governments often find their control over resources slipping as separatist regional movements - typically based on ethnicity - gain momentum, e.g., in many of the successor states of the former Soviet Union, in the former Yugoslavia, in India, in Iraq, in Indonesia, and in Canada. Externally, central governments are losing decisionmaking powers to international bodies, most notably the EU. The introduction of the euro as the common currency of much of Western Europe in January 1999, while paving the way for an integrated economic powerhouse, poses economic risks because the participating nations are culturally and politically diverse and have varying levels and rates of growth of income, and hence, differing needs for monetary and fiscal policies. In Western Europe, governments face the difficult political problem of channeling resources away from welfare programs in order to increase investment and strengthen incentives to seek employment. Because of their own internal problems and priorities, the industrialized countries devote insufficient resources to deal effectively with the poorer areas of the world, which, at least from an economic point of view, are becoming further marginalized. The terrorist attacks on the US on 11 September 2001 accentuated a growing risk to global prosperity, illustrated, for example, by the reallocation of resources away from investment to anti-terrorist programs. Wars in Iraq and Afghanistan added new uncertainties to global economic prospects.
Despite these challenges, the world economy also shows great promise. Technology has made possible further advances in all fields, from agriculture, to medicine, alternative energy, metallurgy, and transportation. Improved global communications have greatly reduced the costs of international trade, helping the world gain from the international division of labor, raise living standards, and reduce income disparities among nations. Much of the resilience of the world economy in the aftermath of the financial crisis has resulted from government and central bank leaders around the globe working in concert to stem the financial onslaught, knowing well the lessons of past economic failures. |
|
= Fields  = World Records = Dictionary = Bar graph = Distribution map = Fields History = Definitions |
| Economy | World |
|
|
|
This page was last updated on 5 February, 2012 |
| |
Home 
Geographic Names
Chiefs of State
Intl. Organizations
Intl. Environmental Agree.
Other References
