We are, according to some economists, in the 3rd generation-long economic cycle in global history. The first was in 1870 to 1913 while the second was post-WWII to 1970s. The current super economic cycle, starting in 2000 (my question is: what happened to the 1980s/90s Asian Tigers?) and expected to last c.30 years, kicking the global economy up 10x from c.$30 trillion in 2000 to c.$300 trillion in 2030. From my calculations that’s a growth of about 8% p.a., which is pretty high.
The global economy will also grow 4.2% in 2011 compared to 4.8% in 2010 (source: IMF). This is a pretty good set of numbers considering the almost-trainwreck that could have occured to us in 2008/09. I vividly recall seeing numbers similiar to this in 2007 when we were writing the Annual Report for the ASD fund that I was co-managing, with the global economy forecasted to grow 4-5% p.a. for the next couple of years. Course, no one foresaw that the GFC was at the brink of our doorstep at the time. I too had no such idea, except for thinking over our research head Ms Lim’s words in a meeting “Before China Olympics, strong growth. After Olympics, recession!” which almost proved true (for the developed world, that is, not China, which continued its 8% growth unperturbed).
A big distinction with this super cycle is that for the first time, emerging countries will be supplying c.70% of global growth compared to c.20-30% previously (no surprises here). Obviously we as Asians (or even for Australasians where I am currently residing in now) have been fortunate to be born in the right continent of growth driver at the right time. Bloomberg reported that the world is currently in a musical chairs game, with the G-20 (of which BRIC countries are members) already replacing G-7. Asian and Middle East corporations are already seen to be sponsoring major sports and events, such as Kia for Australian Open and Emirates for Melbourne Cup (which is actually wrong, but never mind).
So what does this mean for the rest of us? In my opinion, we are already in the right place and in the right generation (provided umur panjang that is). The developed world still controls most of the world’s decision making capability and capital, but emerging countries will increasingly assert a greater portion of it (especially on the capital part). On another part of the world, c.40% of the global population still lives under $2 a day. A global growth and income redistribution is timely and essential to ensure greater posperity for all. We should all be working towards that.
(disclaimer – main source of this article: Bloomberg Mag Jan 2011).