The World Is Tipping Eastward

11th June 09 - The World is tipping eastward

The Centre for Economics and Business Research (CEBR) has been predicting for some time that the Western world would at some stage drop below a 50% share of total world GDP. In fact the share was about 60% in 2004 and dropping but the tipping point was not expected to occur until 2015. However, the effects of the credit crunch has put paid to all that. The downturn coupled with the economic resilience of China now shows that the combined output power of the US, Canada and Europe will drop from 52% last year to 49.4% before 2009 draws to a close.

"The recession has brought forward the time when the non-Western economies produce more than half of World GDP, for the first time since the middle of the 19th century. We had expected this to happen, but not quite so soon. The West will have to start to get to grips with the fact that we are no longer dominant and cannot expect to have things our own way," said Douglas McWilliams, CEBR’s chief executive.

The think tank predicts the West will account for just 45% of the world economy by 2012 and also expects global GDP to fall by 1.4% this year, the first decline since 1946. Other predictions are that the global market will start to grow again in the second half of 2009 and will moderate in 2010 as governments start "fiscal retrenchment". China will overtake Japan in 2009 to become the world’s second largest economy in dollar terms. The fact that China’s economy has bounced back so rapidly will have a favourable impact on the price of oil and other commodities and is one reason why the CEBR ends its latest report by forecasting a price of oil of $80 a barrel by 2012.

The China described by Jung Chang in Wild Swans and the China I used to read about in the Far Eastern Economic Review is economic centuries ago from the China of today. One does not have to be a think-tank to appreciate that Mandarin and the Yuan move ever closer to domination. Go East young man, go East.