Within the last few months, from an economic standpoint, it seems that a “two-speed” world is emerging.
On the one hand, there are the euro zone countries, where financial turmoil threatens to trigger a recession and put the future of the eurozone at risk.
On the other hand, there are developing and high-growth countries that have no involvement with the euro. Their economic growth is increasing and staving off, to some degree, the chances of a global downturn.
For example, the JP Morgan Global Purchasing All-Industry Output Index rose in December to $53—a 9-month high. During the recession in 2008, when the financial system collapsed after the Lehman Brothers crisis, this index was below $40.
This index, which covers the manufacturing and services sectors, is based on the results of surveys of over 11,000 purchasing managers in around 30 countries. Together, they account for almost 86% of global GDP. The survey questions ask about real events, not opinions.
The main actor of global economic expansion in December seemed to be the US, with a nine-month peak growth. This was in tandem with positive employment numbers, which included an increase of 325,000 jobs in the private sector.
India and Brazil also showed further economic expansion, as did Russia (although growth in Russia may be slowing). Output also rose in both the global manufacturing and the service sectors. The latter sector is increasing at its fastest pace since March.
The chief burden on the world economy appears to be the euro zone, which is running at a speed close to zero; only Germany is displaying positive growth signals.
