Economic Perspective: Health of the Global Economy

MARY WALDEN:

“Today’s program looks at the health of the global economy. Mike, the U.S. economy has been growing faster in recent months, but with so much talk about the trade wars and tariffs I’m wondering how the rest of the world’s economy is doing.”

MIKE WALDEN:

“So far, so good. The real change came in 2017. Previously to 2017, of course we have the Great Recession, the recovery in the U.S. was much faster than the recovery in the rest of the world.”

“2017, it seems like the rest of the world got its act together, and we had consistent growth across the world. And that’s actually continued into 2018 despite the concerns about trade wars. Now the one country where there does seem to be a slowdown is China. China grew at a seven percent growth rate last year. It looks like they’re going to come in at six-and-a-half percent this year and maybe six percent next year.”

“And this is because, of course, among all the countries impacted by the emerging trade war China is going to be the biggest because they do rely on exports. But hopefully that’s going to be resolved, and that’s going to put China back on a path.”

“So world economic growth, I think, is good. I think, for example, the European Central Bank, the coutnerpart to the U.S. Federal Reserve, it took them a while to get their act together, but they seem to be providing the stimulus that Europeans needed.”

“Japan is doing rather well. Korea I think is doing well, et cetera. Although we have geopolitical issues there. So right now I think there’s an optimistic look to the world, and especially if the trade disputes are resolved that’ll put the world on an even higher path.”

Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.