Drastic Economic Slowdowns Predicted for China and India

Conference-Board via NextBigFuture
Since the global economic downturn of 2008, the economic hopes of the world have been pinned upon China, India, Russia, and to a lesser extent Brazil. But a quick glance at the chart above displays the drastic downturn in economic growth predicted for China, India, and Russia. Brazil has some significant question marks hanging over its economic future, as does much of the rest of Latin America.

This is all very bad news for those economies that are dependent upon commodities exports for their economic livelihood. That is because the ongoing economic slowdowns in the US and Europe offer no near-term hope for increased demand for oil or other commodities, and with the projected reduced growth in the BRICs as well, the popular projections for an exponential growth in demand for oil & commodities appears to have been built on a foundation of sand.

Advanced economy growth is expected to slow down from an already meager 1.6 percent in 2011 to 1.3 percent in 2012. For 2013-2016, the outlook suggests some recovery in advanced economies, bringing these countries back to the pre-recession growth trend of a little more than 2 percent.

In 2012 emerging economies will slow in growth by 1.3 percentage points on average, going from 6.4 percent growth in 2011 to 5.1 percent in 2012, partly as a result of slower export growth and partly because several of them have been growing above trend. From 2017-2025 emerging and developing countries are projected to grow at 3.4 percent. Many economies will begin to show signs of maturing, at which point the rapid catch-up growth abates.

The greatest challenge for the global economy in this slow growth environment is to raise productivity without losing job opportunities for the millions who are looking for reasonably paid jobs to support their living standards. The growth rate of per capita income globally has been around 2.4 percent since the beginning of the century but sometime between 2017 and 2025, this rate will fall below 2 percent. In contrast to the past half century, that slowdown will also be accompanied by slower growth in population. _Conference-Board_via_NextBigFuture

Comparison of Base Scenario with Optimistic and Pessimistic Scenarios, 2012 - 2025 (November 2011)

	2012 - 2016			2017 - 2025
	GDP Growth in Optimistic Scenario	GDP Growth in Base Scenario	GDP Growth in Pessimistic Scenario	GDP Growth in Optimistic Scenario	GDP Growth in Base Scenario	GDP Growth in Pessimistic Scenario	Distribution of World Output 2020
US	3.6	2.1	1.5	3.1	2.3	1.8	18.2%
EU-15*	2.7	1.6	0.5	2.4	1.7	1.0	16.2%
Japan	2.4	1.1	-0.2	2.1	1.5	0.8	4.9%
Other advanced**	3.0	2.5	2.2	2.0	1.7	1.4	7.8%
Advanced Economies	3.1	1.9	1.1	2.6	1.9	1.3	47.0%
China	9.7	7.0	3.8	4.9	3.5	3.0	22.0%
India	7.8	6.4	4.5	5.6	4.6	4.2	8.5%
Other developing Asia	5.0	4.1	3.4	4.6	3.8	3.1	4.3%
Latin America	4.0	3.3	2.9	3.8	3.2	2.8	7.4%
Middle East	4.6	3.7	2.8	4.2	3.5	2.8	3.4%
Africa	4.6	3.8	2.9	4.6	3.9	3.5	1.9%
Central & Eastern Europe	3.0	2.4	1.7	2.3	2.0	1.7	2.7%
Russia and other CIS***	3.2	3.1	3.0	2.2	1.1	0.0	2.9%
Emerging Market and Developing Economies	6.4	4.9	3.4	4.3	3.4	2.8	53.0%
World	4.8	3.5	2.2	3.6	2.7	2.2	100.0%

Table Source

It should be re-iterated that with the expected drop in demand for commodities by emerging nations such as India and China (as well as by OECD economies) over the next decade, and the likely price-driven increases in supplies for energy commodities such as oil & gas, it is unlikely for energy or commodities shortages to occur on any wide scale during this time -- except as caused by political and governmental action or decree.