Are we really seeing a global growth slowdown? We don’t think so

Russ Koesterich, CFA - Author

Aug. 18 2020, Updated 5:32 a.m. ET

As 2014 is shaping up to be another year of below-trend economic growth, many investors are wondering: Is economic growth once again slowing? Russ explains why his answer is no.

Following five years of an uneven, disappointing and often erratic recovery, investors can be forgiven for a certain level of paranoia when it comes to economic growth.

Each year is forecasted to be the one when the global economy finally “breaks out” of historically low growth levels. Instead, for much of the past five years, gross domestic product (or GDP) growth figures in Europe, the United States and even emerging markets have consistently come up short.

Despite some recent positive surprises in the United States, this trend has generally continued in 2014, leaving many investors asking the question: Is economic growth once again slowing? I believe the answer is no.

Market Realist – The above graph shows the annual GDP growth rates of various countries across the world. Both developed market (VEA) and emerging market (EEM) economies have experienced a slowdown in growth. The average world growth has declined from 2.8% in 2010 to 2.2% in 2013.

As you can see in the chart above, Europe (EZU) has continuously been registering declining GDP growth rates in the past five years due to the double-dip recession it faced after the U.S. financial (XLF) crisis of 2008 and the European debt crisis that followed.

The U.S. economy (SPY) hasn’t been able to break out of the lows it experienced in the past five years either. The annual GDP growth rate for 2013 was 1.9%.

Brazil (EWZ), India (EPI), and China (FXI) did start to recover in 2013. But rates haven’t been able to revert to pre-crisis levels.

Read on to the next part of this series to see why most manufacturing surveys show that global growth is stable.

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