An Economic Circumnavigation
Though it might seem odd to normal folk, the highlight of my dark, cold January days is the arrival of my copy of The Economist's 'Pocket World in Figures'. So, having perused it during the winter evenings, I shall attempt a digest of the economic state of the world.
A caveat here: though this is the 2010 edition, the figures given relate to the year ending December 31st 2007, unless otherwise stated. It takes a full two years to collect, distil and tabulate the data.
So, let's start at the very beginning with the big picture. Still at number one in the GDP charts is the Good Ole US of A with a GDP of $13,751 billion, up $564 billion on 2006. (Sorry, I was a big fan of Alan 'Fluff' Freeman!) The top five places remain unchanged with Japan at No.2, Germany at No. 3, China at No. 4 and our good selves at No.5. We in the United Kingdom achieved a GDP of $2,772 billion, while China managed a GDP of $3,206 billion. Both ourselves and China seem to have grown enormously in 2007: China's GDP grew by 21% and ours grew by something over 16 percent. At first sight this seems wildly optimistic and I suspect we need to look deeper into those figures. The US economy is still far and away the world's biggest economy, being three times larger than its nearest rival, Japan, with Germany about a quarter of the size of the US in terms of GDP.
Looking now at GDP per capita, the picture changes dramatically with Luxembourg top of the table, each of its citizens enjoying an annual $103,040. Challenging for top position are Bermuda, Norway and the Channel Islands. A surprising fifth place goes to Iceland with a per capita GDP of $64,190 - though this will take a knock when the 2009 figures become available. By this measure we in the UK slip to 14th position at $45,440, just behind the USA at $45,590. At the bottom of the league table we find Burundi with a per capita GDP of $120.
If we now look at purchasing power, a measure of our economic clout in world markets, then the Luxembourgeois are still top dog. Taking the USA as 100, then each citizen of Luxembourg can boast a purchasing index of 174.3, while we slip to 23rd place with an index of 77.1. The inhabitants of Zimbabwe are bottom of the table with and index of 0.4 - a staggering thought there, that each Luxembourgeois is equivalent, in purchasing power, to 435 Zimbabweans.
Our prospects for the future may be divined by looking at GDP growth per annum. Top of the league here with a breathtaking 66.2. percent growth in GDP - almost double its 2006 growth - is Equatorial Guinea, driven no doubt by its new-found oil wealth. The next four places go, surprisingly, to Turkmenistan, Azerbaijan and Myanmar. The fortunes of Azerbaijan are, once again, driven by oil, but one wonders on what the growth of the others is founded. A clue to this might be found in the GDP growth of the sixth in the table, China, at 15.1 percent and which is rapidly developing lines of supply of commodities essential to its continued economic growth. It is a sobering thought, here, that the UK no longer figures even in the top 50 countries for GDP growth, in fact, we are 36th from the bottom of the table, jointly with Macedonia and Venezuela, showing a paltry 3.3 percent. Just below us at joint 34th from the bottom is the USA and Brazil, with 3.2 percent growth. But, let's not despair: at least we are growing, unlike Sierra Leone, whose economy shrank by 4.8 percent.
Britain's past imperial splendour was underpinned by trade, so how are we doing these days? Well, we are no longer the world's economic hegemon and haven't been these past 60 years: the world's biggest exporter is the Euro Zone, accounting for a full 16.3 percent of world exports, and at that almost half as big again as the USA which takes 11.7 percent. China is coming up fast on the inside rails in third place at 10.4 percent, with Germany in forth place at 8.8. percent. The UK is still the world's fifth biggest exporter, accounting for 6.1 percent, outpacing, surprisingly, Japan, in sixth place with 4.7 percent of world exports.
Breaking down these exports further we find the Euro Zone still in first place as exporter of goods, with 15.5 percent. Germany alone is the world's largest exporting country, accounting for 10.1 percent of world exports in goods. Third is China at 9.1 percent and fourth is the USA at 8.6 percent. The United Kingdom, at 3.3 percent, is in 9th position, down two places on its 2006 position (3.9 %).
In services, the Euro Zone is once again the world's biggest exporter, taking 17.8 percent. The USA is in second place with 16.3 percent of exports of services, with China in third place (12.6 %) and the United Kingdom in fourth place with 10.8 percent.
Trade takes us nicely into trade surpluses and deficits where we find China in pole position with a massive surplus $371.8 billion, with Germany in second place with a very creditable $252.9 billion surplus. The Euro Zone, 11th from top, clocks up a respectable surplus of $38 billion. At the bottom end of the scale we find the USA struggling with a staggering $731 billion deficit. Spain is one place above bottom with a deficit of 145 billion, while we are third from bottom, notching up a relatively modest deficit of $78.8 billion.
Of late the Bank of England has been fretting because it looks as if inflation might take off again in Britain, possibly breaching the 2.5 percent limit, but spare a thought for the Zimbabweans who, in 2007, were struggling with an inflation rate of 24,411 percent!
Loooking now at industrial output, we find the USA once again in the top slot at$2,737 billion, followed by China ($1,555 billion), Japan ($1,313 billion), Germany ($4895 billion) and, in fifth place, the UK ($569 billion). The USA's industrial output has increased by 3.5 percent over 2006, while China has increased by almost 15 percent. Britain in that same period increased its output by 12 percent, a figure which, once again, seems overly optimistic and requires further investigation.
If we look now at growth in industrial output over the period 1997-2007, then the picture changes dramatically. Top of the growth league is Chad, with an average annual growth of 39 percent, followed by Azerbaijan (34 %), Cambodia (31 %), Mozambique (29 %) and Sudan (24 %). These countries, it has to be said, were starting from a very low base and the figures need to be viewed in that context. What is alarming is that in this same period, the UK managed only 05 % growth, putting us 11th from bottom in the world league table of industrial growth, giving rise to further doubts about the claimed 12% growth in the year 2006-07.
These raw industrial output figures can be broken down into manufacturing and services, as follows:-
In terms of manufacturing output, Britain ahs slipped once place down the table in the year 2006-07, though in services it maintains its ranking in fourth place having achieved a growth of 18 percent.
Though the first into the Industrial Revolution, the British still like to think of themselves as essentially a nation of yeoman farmers, hence the continuing popularity of The Archers, which panders to this national psychosis: Britain is forever Ambridge. So, it might come as a shock to learn that we do not even figure in the top 30 for agricultural output; indeed, we find ourselves 7th from bottom, agriculture accounting for only 0.9 percent of GDP. China leads the world in agricultural output ($357 billion) with India second ($195 billion). The USA, once the breadbasket of the world, is in third place ($131 billion).
It is perhaps in energy that we see the strongest indicator of national fortunes. (The following figures relate to the year 2006.) China is the world's leading energy producer at 1,749 MTOE (million tonnes of oil equivalent), a growth of 6.5 % on 2005, with the USA in 2nd place at 1,654 MTOE, a growth of 1.4 percent on 2005. The UK is the 16th largest producer of energy at 187 MTOE.
What is of greater concern is that the USA still ranks as the world's largest consumer of energy (2,321 MTOE) with China this time in 2nd place (1,879 MTOE). We in the UK are the 10th largest consumer of energy (231 MTOE), no doubt reflecting our dwindling oil reserves and output of coal. We are now net importers of energy, importing 19 % of our requirement, a position that has deteriorated from the previous year (13 %). We are rapidly becoming highly dependent upon energy supplies from beyond our shores.
Though we have long since said goodbye to empire, we are still the world's second largest spender on armaments in absolute terms at $63 billion per annum, though a long way behind he USA at $552 billion. Even then, the USA only spends 4.0 % of GDP on arms, whereas Myanmar (Burma) spends 33.4 percent.
We have long had an inferiority complex with regard to America in economic terms, despite our 'special relationship'. They have always seemed to be the vastly more successful younger cousin, but in one area we can beat them into a cocked hat, and that is in the matter of office rental prices. London (West End) has the most expensive office space in the world at $2.677 per square metre per annum, with Moscow in 2nd place at $2,493. New York (Mid Town) is a relative bargain at $1,055 per square metre per annum.
Office costs are not the only consideration when running a business. Ease of registration of a company and corruption need to be considered. In New Zealand, one can register a company in a day; compare that to Surinam where it takes on average 694 days. Denmark, New Zealand and Sweden are the least corrupt countries, achieving an index of 9.3 - an index of 10 is positively saintly. On this ranking the UK only scores 7.7, but we can at least hold our heads up against Somalia, which only scores 1.0 on this scale.
The future of the developed nations is highly dependent upon education so it is surprising to learn that Cuba tops the table on education spending, disbursing a full 13.3% of GDP on its schools and colleges. In this ranking the UK does not appear in the top seven; Denmark does appear in the top 7, spending 8.3 % of GDP on education. While we may not be one of the world's top spenders on education, we do have its 3rd and 4th most prestigious universities, deferring only to Harvard and Yale. Imperial College London, and University College London, rank 6th and 7th respectively.
At the top end, we in the UK seem to be intelligent, but are we healthy? Top of the table in health spending is Timor-Leste, with 17.7% of GDP; the USA comes in second with 15.3% of GDP spent in health provision. Although we do not figure in the top 17 for access to a doctor, we should at least consider ourselves fortunate when measured against Malawi for whose citizens there is only one doctor per 50,752 people. If you need a doctor in a hurry, then you need to go to Turkmenistan where there is one doctor per 140 of the population. But, if you need a hospital bed, then move to Japan, where there is one bed per 14 people. Once again, the UK does not figure in the top 40 for access to a hospital bed. Oddly enough, Turkmenistan, despite all those doctors, has the world's worse death rate from cardiovascular disease.
We in the UK do not appear in the top 27 for spending on health, so does this mean we are in good shape as a nation? The life expectancy figures suggest otherwise: we rank 29th in the world for life expectancy, living on average 79.4 years, though this, to be fair, is only 3.3 years less than the Japanese who enjoy the world's greatest longevity as a nation. The Swiss are surprisingly long-lived at 81.8 years, but then they have no money worries and all that fresh mountain air. Lowest life expectancy is to be found in Afghanistan (43.8 years) with Zimbabwe a close second at 44.1 years.
Politicians make much of the institution of the family, so is the nuclear family still thriving? Well, we do not figure in the top 50 for our propensity to marry, unlike the Mongolians where there are 19 marriages per 1,000 of population. That said, we are 19th in the league table for divorcing. How does that work? If we are not getting married, how can we have so many divorces? Are people divorcing pre-emptively?
Let us look finally at the vices. Top of the league of beer-drinkers are the Venezuelans, downing 83 litres per year per head, though for all alcoholic drinks the Germans are up there - or more likely down there - quaffing 100.4 litres per year per head. Though we in the UK do not appear in the top 22 as beer drinkers, we are 16th in consumption of all alcoholic drinks, and a surprising 9th in the table for downing champagne (0.6 bottles per head per annum). Clearly our taste in alcohol has moved up-market.
The Greeks are lost in a cloud of tobacco smoke, being the world's heaviest smokers, gasping through 8.3 cigarettes a day per head. In this table the UK does not appear in the top 23 and so we can claim some virtue.
So, there we have it. Once again, these figures relate mainly to 2007 so it will be interesting to see how the rankings change as the effects of the banking crash of 2008 begin to feed in. The figures for Britain's GDP growth in the year 2006-07 test my credulity and I would like to know how they were arrived at. Was it swollen by huge amounts of money flowing into the UK? And were these responsible for the following years banking crash? I look forward to reading next year's economic runes.
Chris Waller - Permission granted to freely distribute this article for non-commercial purposes if attributed to Chris Waller, unedited and copied in full, including this notice.
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