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Published 17 October 2012 09:46, Updated 18 October 2012 00:50
The global financial crisis (GFC) through this second decade of the 21st century is causing a much faster reorientation of global economic power across 230 nations, which are slowly forming into eight geopolitical economic regions.
The first chart forecasts the relative importance of these regions in 2017 when global gross domestic product is expected to be about $US111 trillion (in purchasing power parity terms).
Our home region – the Asia-Pacific – will easily be the largest region, at 32 per cent, having overtaken North America (21 per cent) and western and central Europe (18 per cent, and dominated by EU member nations).
The growth rate differential is exaggerated by Asian boom economies, on the one hand, and in-trouble, debt-ridden nations in America and Europe on the other.
This differential is expected to continue at least until 2017, if not longer.
The EU, which represents 93 per cent of the western and central Europe region, isn’t expected to regain its aplomb, if not (reduced) mojo, until early in the 2020s.
The United States, as the dominant member (84 per cent) of the North American region, may achieve this a little sooner but it is by no means guaranteed.
The other five regions are much smaller and in aggregate make up 28 per cent of world GDP.
Three – the Indian sub-continent; Central and Southern America and eastern Europe (predominantly the Russian Federation) are growing healthily. These regions contain three of the BRIC cluster, being Brazil, Russia and India. China, of course, is part of the Asia-Pacific.
The remaining two regions are expected to have moderate and improving growth rates, respectively: the Middle East (5.5 per cent of world GDP) and Africa (4.1 per cent).
The second chart takes a closer look at our region in 2017.
China is clearly the anchor nation, with an expected 57 per cent of the total GDP of $US36 trillion (again in purchasing power parity terms).
Hong Kong adds a further 1.3 per cent and Taiwan (which is regarded by China as its 21st province) would add a further 3.5 per cent, making greater China’s share more than 61 per cent – and growing.
Japan, trapped in the GFC with its frightening national debt of about 250 per cent of GDP (the world’s worst), is expected to be just one-quarter of the size of greater China, in turn reminding us of the changed priorities in our export drive.
At 3.4 per cent of the region’s GDP in 2017, Australia would rank sixth in
size; Indonesia having already overtaken us.
On the other hand, it is important to think of our region in 2017 as 29 times larger than our own economy, growing at twice our rate of growth, and being a marvellous source of business growth in terms of investment in and trade with the region.
Opportunity knocks, as they say.