Today’s Global Economy? We Are All in it Together!
Today I would like to write about the World Economy, highlighting some of the current strengths and developments on the examples of the U.S., Europe, China and India. We live in a very exiting time, in a truly global world which will be even further globalized in the near future. It is on us to build a strong global network that allows all of our countries and citizens around the world to have access to knowledge and enable them to trade with their foreign counterparts.
Let’s start with the US. Generally speaking the US is doing great economically, but the current strong US dollar is showing mixed results for US businesses, with some benefiting from working with manufacturers and suppliers with lower currency rates and others facing the disadvantage of receiving revenue in weaker currencies. European and Japanese companies like Canon, L’Oreal and Siemens are among the manufacturers and retailers who stand to benefit from a stronger US currency. On the other hand, exporters and many large U.S. multinational companies are preparing for a decrease in their earnings.
It seems that the US dollar will continue to rise in comparison to other currencies. At the same time we also experience improvement in the Eurozone economy as well as growth in India and China.
Factors contributing to the recent economic pickup for the Eurozone economy, where a true rise in GDP was and is still somewhat of a concern, include cheaper oil, looser credit and a weakening euro. The Eurozone is expected to grow by 1.2 percent in 2015, an increase from the 0.9 percent growth seen in 2014. As the second-largest economy in the world, the Eurozone’s expected growth should, also in turn, increase the global growth rate. This is great news! Germany reported GDP growth as well as other smaller countries, while France and Italy remained stagnant.
On the other side of the world, everyone should keep a close eye on the rapid growth rates of both India and China. The race between India and China became closer during the past fourth quarter when comparing their GDP growth. Recent reports have shown that India is growing faster than China; however, India has also changed how it calculates GDP, which figured India’s fourth quarter growth at 7.5 percent and therefore was faster than China’s at 7.3 percent. Falling oil prices, a progressive government and other cheaper commodities have helped India’s economic growth, but in absolute numbers speaking China’s economy is still and will stay much larger than that of India. I feel that China is the new Germany of Asia with a disciplined workforce, the largest middle class in the world. Count them in to be contributing even larger shares to the world economy.
In addition to the close race in growth rate between India and China, there are also new developments in business relations between the US and India. Despite concerns arising from the recent nuclear pact between the US and India, the Indian market still remains to be a huge gain for the industry. Companies, such as General Electric and Westinghouse, could be poised to win billions of dollars in maintenance and fuel contracts in nuclear energy. It is a good example how the world economy is tied together, we are all tied together.
These changes are very promising, and as these developments occur, the different counterparts continue to exchange powerful and influential international leadership roles. Let’s all be working together in order to exchange our strengths and foster our international connections in the right way to not only profit from our trading, but to help boost global GDP and consequently assist in raising the global standard of living and creating peace through trade in many countries around the world.