CAPE TOWN (miningweekly.com) – Despite two huge global disturbances – the burst of the technology bubble and what’s become known as the Great Recession in 2008/9 – world GDP growth has been stronger in the past decade than in the prior two decades.
“The world economy has been stronger than many people seem to believe. It’s not as strong as the world’s potential, but it is certainly not a world as weak on a global basis assumed by so many Western commentators,” Cities Growth Commission chairperson and former Goldman Sachs asset management chairperson Jim O’ Neill said on Tuesday.
Global GDP grew by 3.4% between 2011 to 2014, compared with 3.3% between 1981 to 1990. Global growth is expected to average 4.1% between 2011 and 2020.
O’ Neill told delegates at the Mining Indaba that China continues to be special. The Asian giant is expecting 7.5% growth in its GDP between 2011 and 2020.
“China’s current account balance shows its net relationship with the rest of the world. In 2008, China’s current account surplus was nearly a tenth of GDP. Today, the Chinese economy – at $240-billion – is twice as big as it was six years ago. China has created another one of itself in six years.”
However, he said China was shifting its focus towards its domestic economy and on commodities that would fuel its own domestic growth.
“We are in the early to middle stages of a new China….a China focused on the quality and sustainability of its growth rates and not focused on the quantity.…a China focused on its domestic consumption and not a China that is an engine for the world….a China that will want commodities that will sustain growth in China.”
O’Neill said the prospect of China returning to the days of double-digit GDP growth could be ruled out, while India would grow at a stronger GDP rate than China.
On commodities, O’Neill said it seemed clear that lower oil prices were “a net positive” for the world. He suggested that commodity prices would not recover soon.
He added that while the US, China, Japan, Germany and France were the largest economies in the world, this was likely to change by 2050. He expected China to take the top spot, with India, Brazil, Japan and Russia also ranking high and Nigeria expected to come in as the fifteenth largest economy.
In terms of sustainability, countries like the Netherlands, Switzerland, Luxembourg, Finland and Norway topped the Variables for Sustainable Growth (VSG) rankings.
South Korea was ahead of the pack in terms of education.
South Africa topped the VSG Africa rankings, followed by Morocco, Egypt, Kenya and Uganda. Openness to trade, quality of transport and technology readiness were vital indicators.