Growth in World Per-Capita Real GDP to Continue

In his book "The Progress Paradox: How Life Gets Better While People Feel Worse," Gregg Easterbrook, senior editor at the New Republic and contributing editor to The Atlantic, castigates the media for dwelling on minor problems without celebrating the broader, more upbeat context in which they exist. One of the broader, more upbeat events of recent years is the significant and dramatic increase in real GDP per-capita worldwide.

Using world GDP data from the IMF and world population data from the U.S. Census Bureau, the chart above shows real world GDP per-capita from 1985 to 2013 (data from 2008 - 2013 are estimated). After remaining constant at about $5,000 for 15 years from 1987 to 2002, real GDP per capita will increase 60% from $5,000 in 2002 to an estimated $8,000 this year. After leveling out for a year in 2009 due to the global economic slowdown (see arrow above), growth in per-capita real output is expected to resume in 2010 and exceed $9,000 by 2013.

Bottom Line: The 60% growth in world per-capita real GDP between 2002 and 2008 is probably one of the greatest periods of economic growth in such a short period of time in history, and is definitely part of the broader, more upbeat context of this period in history.

According to the International Monetary Fund's most recent economic outlook, world real GDP growth is projected to slow from 5% in 2007 to 3.75% percent in 2008 and then to 2.2% in 2009 (see chart above), with the downturn led by advanced economies.

Looking forward, the IMF predicts that world real GDP will rebound to above-average growth rates of 4.2% (2010), 4.8% (2011), 4.8% (2012) and 4.7% (2013). Growth for the advanced economies is forecast to be above 2% by 2010, with even higher growth of between 2.5% to 3% between 2011 and 2013.

Bottom Line: If the IMF forecast is accurate, the current global economic slowdown will produce only one year of below-average world output growth (2.2% in 2009), which will follow six years of strong world economic growth above the 3.46% post-1980 average (see chart), and an above-average expansion of the world economy will resume in 2010 with at least four years of real GDP growth close to 5%. Moreover, if the IMF is correct, the predicted global economic slowdown of 2009 will be roughly equivalent to the world slowdown in 2001, and much less severe than the slowdowns in 1990-1991 and 1980-1982.

Comments

[thecadean]

What are you smoking??
We will be lucky to go back to a flat line economy. I have traveled the world over three times in the last 5 years and continue to hold hope on the china econ. However, the rest of the world will simply rot. India and Latin America are dysfunctional democracies, US is still living in a Disney like economy (they still believe the dollar has some value, and Russia's oil bubble has popped (can you say Iceland.)

With all respect... Dr. Perry, How long have you been working for the Bush administration?? Please step outside the office and take a walk with some of the real people. Like 20% of the Europeans that are seeking employment. We built and artificial economy based on a false belief that assets can substitute for manufacturing. Now that the real estate mark has returned to normal, we now must return to true growth not financially engineered growth. Aisa is the only market prepard to take the next step.

2008 Nov 30 09:42 PM

[vlad]

What kind of comment is that? I travel the world a lot and I agree with Mark Perry. His argument is not that the world is a perfect place - he just says that world per capita income is much higher in 2008 than in 2002. And for the 2 particular regions where I have been extensively over this period - Eastern Europe and Latin America - I can tell you that this is definitely true. And one other thing - I would always take the "rotten democracies" of Latin America and India over the Chinese totalitarianism. The problem with heavy handed government control of economy and politics is that it creates the illusion of stability over short-term periods but long term is prone to huge blow-ups. I come from Eastern Europe and remember some Western leftists coming to communist countries in the 80's and marveling at the stability of daily life there as opposed to the "corrupt" western democracies. Like Nassim Talbe from "Black Swan" says: The more stable something appears, the more prone to a sudden collapse. Actually India is more stable than China politically exactly for this reason: I can tell you with certainty what the Indian poilitical system will be in 20 years - it will be some sort of democracy that it is today. But I am less certain what the Chinese political system will be in 20 years. Therefore India is more stable politically.



On Nov 30 09:42 PM thecadean wrote:

> What are you smoking??
> We will be lucky to go back to a flat line economy. I have traveled
> the world over three times in the last 5 years and continue to hold
> hope on the china econ. However, the rest of the world will simply
> rot. India and Latin America are dysfunctional democracies, US is
> still living in a Disney like economy (they still believe the dollar
> has some value, and Russia's oil bubble has popped (can you say Iceland.)
>
>
> With all respect... Dr. Perry, How long have you been working for
> the Bush administration?? Please step outside the office and take
> a walk with some of the real people. Like 20% of the Europeans that
> are seeking employment. We built and artificial economy based on
> a false belief that assets can substitute for manufacturing. Now
> that the real estate mark has returned to normal, we now must return
> to true growth not financially engineered growth. Aisa is the only
> market prepard to take the next step.

2008 Dec 11 10:30 AM

[Jeff]

"The 60% growth in world GDP between 2002 and 2008 IS one of the greatest periods of economic growth in world history."

the cadean,

Negative people truly amaze me, over the past six years, the well being of all man kind has improved faster than at any time in history, ANY TIME IN HISTORY! We have now hit a relatively "in world terms" small speed bump, not even negative GDP world wide, and the wining, gnashing of teeth and wailing, just won't stop.

ALL levels of humanity have improved over the past six years. Oh, I guess the pessimists wanted 100% GDP growth, get real.

Only the most brain dead can not see what is taking place, here and now, across the globe. The middle class has grown faster than any time in history, more people have been brought out of poverty, we live in truly amazing times.


Pull your pitiful head out of the sand and take a look around.

2009 Aug 04 11:37 PM