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<p><div class="image-container"><div class="image"><p class="source"><a href="http://www.flickr.com/photos/minnesotahistoricalsociety/3150759433/">Flickr/Minnesota Historical Society</a></p></div></div></p>
<p>Today is the perfect day to step back and take a big picture look at the world <keyword id="34412" type="ORGANIZATION" weightage="60" keywordseo="economy">economy</keyword>.</p>
<p>For one thing, it's Labor Day in the US, so it's a natural time to gain perspective. It's also, fortuitously, PMI Day in the rest of the world, so we have a lot of fresh economic data.</p>
<p>So let's hit on the big themes.</p>
<p><strong>1) Europe is coming back.</strong></p>
<p>We've been writing about this since early in the summer, but the latest data makes it clear that across the Eurozone, a comeback is happening.</p>
<p>Both <a href="http://www.businessinsider.com/spanish-august-pmi-2013-9">Spanish</a> and <a href="http://www.businessinsider.com/italian-august-pmi-2013-9">Italian</a> PMIs had their best months since Spring 2011. Germany remains solid. And even Greece (!) is surging back. It's nearly back to growth.</p>
<p>This table from Markit nicely tells the whole story in the Eurozone.</p>
<p><div class="image-container display-table"><div><div class="image"><p class="source"><a href="https://twitter.com/MarkitEconomics/status/374441660672778242/photo/1">Markit</a></p></div></div></div></p>
<p>And it's not just the Eurozone.</p>
<p>UK data has been solid lately, and Eastern European numbers are looking very strong.</p>
<p>Here for example is the Czech Republic (Poland looks similar).</p>
<p><div class="image-container display-table"><div><div class="image"><p class="source">Markit</p></div></div></div></p>
<p>Europe is not "out of the woods" or anything. But the numbers are going in the right direction, which makes everything from debt to politics a lot smoother.</p>
<p><strong>2) China is not crashing</strong></p>
<p>For years, China has been in a a Schrödinger's Hard Landing. Some people are convinced that it's all falling apart. Others insist that things are just fine, or maybe slowing a tad.</p>
<p>Earlier this year there was serious concern about a hard China fall, but the recent data has eased those concerns somewhat.</p>
<p>Again going to the latest PMI data, it looks like things are doing fine. Growth isn't at its most spectacular levels, but the situation is not deteriorating too hard, and the numbers right now are a tad better than expected.</p>
<p><div class="image-container display-table"><div><div class="image"><p class="source">Markit</p></div></div></div></p>
<p>Anyway, the more important story in China seems to be the government's eagerness to see "quality" growth (i.e. growth that's not just driven by aggressive investment), and also a push to reform and crack down on corruption, which we're seeing in the newsflow coming out of the country. So China might not be the voracious consumer of the world's commodities quite the way it used to be, but a full-on meltdown in the world's most populous country doesn't seem that likely either.</p>
<p><strong>3) Emerging Pain</strong></p>
<p>Outside of China, it's clear that several of the world's formerly red-hot emerging markets are experiencing serious pain.</p>
<p>Indonesia and India are the pits, as both are seeing deteriorating economic data, a rush of outflows, diving currencies, diving stock markets, inflation, and all that stuff. What's causing the weakness? Part of the issue is being ascribed to the rise in US interest rates causing dollar strength and a reversal of hot-month investment inflows. Strong inflows in earlier years had helped paper over, it's argued, structural flaws in the economy, that now need to be addressed.</p>
<p>Just today, both clocked in with some ugly numbers. India had its worst PMI Manufacturing report in years, and Indonesia whiffed on a trade number. The Jakarta Market fell 2.6%. The question is not whether the scene is bad, but whether things develop into a real "crisis." So far, the thinking seems to be that this doesn't have to be an actual crisis-crisis, a la the late 90s.</p>
<p><strong>4) The US: A little better than same-old, same old</strong></p>
<p>Better-than-expected growth is right around the corner in the US... of course we've been saying that for like 3 years now. But now, maybe this time it's real. Maybe? Possibly?</p>
<p>Economic data in 2013 is a bit stronger, and seems more durable than at any time since the crisis. The labor market continues to improve, and the strength of the housing market is well known. But none of it is that good, especially on the labor front, and lately some of the housing data has been mediocre (though actual prices are quite robust).</p>
<p>Once again, goings on in Washington appear likely to be unhelpful. The coming September chaos (Fed nomination, Fed tapering, budget debates, and debt ceiling) are very well known. Once again, it seems like we can't get out of our own way:</p>
<p><strong>5) Some other themes</strong></p>
<ul>
<li>Syria. We're now in a weird holding pattern, and shaping up for one of the biggest votes in Washington DC since TARP.</li>
<li>Oil is on the rise.</li>
<li>Japan seems to be doing okay, though things have quieted down quite a bit.</li>
<li>Iraq: A mess again.</li>
</ul>
<p>So there's your state of the world: Europe back on the rise, China doing okay, the emerging world ugly, the US doing better, but still a perennial disappointment, and a slew of new global geopolitical issues hanging over everything.</p>

Here's The State Of The World Economy

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Reuters</span></p><p class="caption">A schoolboy walks amid fumes emitted from fumigation work carried out by a municipal worker (unseen) in a residential locality in New Delhi, India, September 15, 2015</p></div><p></p></div></div>With global growth stalling, the International Monetary Fund has repeatedly revised down its forecasts and is now <a href="https://www.imf.org/external/np/pp/eng/2016/041416.pdf">calling for</a> more assertive policy action to boost demand. In normal times, central banks cutting short-term interest rates is - even for liberal Keynesians like <a href="http://krugman.blogs.nytimes.com/2012/05/08/structural-flashbacks/?_r=0">Paul Krugman</a> - sufficient to address deficient demand. But these are most surely not normal times.</p><p>As our new <a href="http://www.cfr.org/global/global-monetary-policy-tracker/p37726?cid=otr-marketing_use-global_montetary_tracker#!/p37726?cid=otr-marketing_use-global_montetary_tracker">Council on Foreign Relations Global Monetary Policy Tracker</a> shows, a record 23 countries - accounting for a quarter of world GDP - now have central-bank policy rates of zero or less. A further six - including the United States - have policy rates of 1 percent or less. This means that the scope for monetary stimulus using conventional tools, such as policy-rate cuts towards zero, is - as the graphic below shows - nonexistent or limited in nations accounting for 60 percent of the global economy.</p><p>But what about unconventional tools?</p><p>Central banks in Europe and Japan have shown that monetary policy rates can go below zero, but there is a lower limit. This is because banks and individuals can switch to holding physical cash - which pays zero interest - instead of deposits earning negative interest. Holding cash is not costless, particularly large sums that need to be stored and insured, which is why slightly negative rates can potentially be effective.</p><p>But how low can rates go before there is switching into cash? U.S. Federal Reserve staff concluded in 2010 that the lower bound was around -0.35 percent. They were probably, however, underestimating the full costs of storing bills. European central banks have shown that rates below this are possible - the deposit rate is now as low as -1.25 percent in Sweden. Still, it seems the end is nigh for pushing such rates lower.</p><div class="nhpullquote right">A record 23 countries - accounting for a quarter of world GDP - now have central-bank policy rates of zero or less.</div><div class="nhpullquote right"><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>REUTERS/Jim Young</span></p><p class="caption">Former US Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill in Washington July 19, 2006.</p></div><p></p></div></div></div><p>Additionally, there are unintended side effects of negative rates that central banks don't like. One is reduced bank profits - or bigger losses. Banks have generally been unwilling to try passing on negative rates to depositors, and such reluctance compresses the spread between what they earn on lending and what they must pay out to account holders. And many banks in Europe are loaded up with nonperforming loans and are in poor shape to withstand further spread compression.</p><p>Money market funds, a significant source of short-term bank funding, are also being pushed onto life support. Negative rates mean the funds may either fail to repay investors in full (known as "breaking the buck") or simply shut down. <a href="http://www.brookings.edu/blogs/ben-bernanke/posts/2016/03/18-negative-interest-rates#ftn5">Former Fed Chair Ben Bernanke</a> thinks these risks mean that pushing U.S. rates as deeply into negative territory as Europe has done is unwise.</p><p>What else can central banks do then? Once short-term rates are at the lower bound, they can purchase longer-term assets to reduce longer-term rates - known as quantitative easing. To date, these assets have predominantly been government and quasi-government bonds (such as those issued by supranational agencies like the European Financial Stability Facility). But the Fed has also purchased mortgage-backed securities, and the European Central Bank has bought bank-issued covered bonds, as a means of pushing down borrowing costs broadly in the economy.</p><p>Yet central banks cannot purchase such assets in unlimited quantity. If they buy too much of them, the markets dry up. And it may be difficult or impossible to restart trading once economic conditions return to something more normal.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Thomson Reuters</span></p><p class="caption">European Central Bank (ECB) President Draghi speaks during a news conference at the ECB headquarters in Frankfurt</p></div><p></p></div></div></p><p>The ECB has therefore decided to push into riskier assets. To ensure it can continue to meet its 80 billion euros monthly purchase target, it will begin purchasing investment-grade, non-bank corporate bonds in the second half of this year. The Bank of Japan is buying equities.</p><p>But like negative rates, quantitative easing produces its own headaches. Central banks are rightly reluctant to involve themselves in credit allocation - picking winners and losers by subsidizing rates for some borrowers and not others. Big companies love to have their bonds and stocks bought up by central banks as that pushes down their cost of capital. But what about companies too small to issue them? They are left out and, therefore, compete at a disadvantage.</p><p>Some bonds are also yielding negative rates, meaning that the central bank loses money by buying them. Currently, any bond with a maturity below 9 years in Germany and 10 years in Japan will lose money if held to maturity. To limit such losses, the ECB will only buy debt with a yield above its deposit facility rate, which currently stands at -0.4 percent.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>REUTERS/Axel Schmidt</span></p><p class="caption">German Finance Minister Wolfgang Schaeuble speaks during the session of Germany's parliament, the Bundestag, in Berlin, Germany, July 17, 2015.</p></div><p></p></div></div></p><p>Not surprisingly, there has been fierce debate about the efficacy of unconventional policy measures. The European Central Bank has clashed with German officials over the appropriate path of policy in the euro area. German finance minister Wolfgang Schaeuble has argued that expansionary monetary and fiscal policies are the cause of economic woes, not the solution. And ECB minutes show divisions within the governing council.</p><p>Most recently, some members questioned the impact of corporate bond purchases - as the ECB would be helping large companies, which are not generally constrained by high financing costs or a shortage of cash. Jens Weidmann, the president of Germany's central bank Deutsche Bundesbank, has reportedly opposed multiple elements of the ECB's asset purchase program. Similar rifts are evident on the Bank of Japan's board, with the vote to lower rates into negative territory split 5-4.</p><p>Furthermore, the legality of unconventional measures is in question. The German high court challenged the legality of ECB government bond buying. In the United States, an<a href="http://www.federalreserve.gov/monetarypolicy/files/FOMC20100805memo05.pdf">internal Fed memo from 2010</a> revealed uncertainty over whether the Fed could legally charge banks interest on their deposits.</p><div class="nhpullquote right">In short, the world economy is running on monetary fumes. We had better hope it picks up steam on its own, because policymakers are unlikely to be of much further help.</div><div class="nhpullquote right"></div><div class="nhpullquote right"><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>REUTERS/Hyungwon Kang</span></p><p class="caption">Larry Summers</p></div><p></p></div></div></div><p>With monetary policy perhaps nearing its practical or political limits, fiscal stimulus is now the tool of choice for notable centrist Keynesians like <a href="http://larrysummers.com/2016/02/17/the-age-of-secular-stagnation/">Larry Summers</a>. Yet there are also significant barriers to expanding government spending. In countries like Italy and Japan, fiscal stimulus is effectively off the table, owing to already high levels of government debt.</p><p>The Japanese government is torn between wanting to reduce debt (now 250 percent of GDP) through further sales tax hikes and wanting to boost growth by cutting taxes or spending more. In those countries that do have fiscal space - such as Germany and the United States - there is fierce political resistance to using it. The German government is committed to budget balancing. In the U.S., the Republican Congress opposes spending hikes, and the Democratic White House opposes tax cuts.</p><p>In short, the world economy is running on monetary fumes. We had better hope it picks up steam on its own, because policymakers are unlikely to be of much further help.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/what-would-happen-fired-gun-space-2016-5">Here's what would happen if you fired a gun in space</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="90ZHJnMzE6mC4tNDFSis6uXAptaFK2bb" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

The world economy is running on monetary fumes

<div style="float: right; margin: 15px 0 20px 20px;"><table border="0" cellspacing="0" cellpadding="0"><tbody><tr><td colspan="2"><a href="https://static-ssl.businessinsider.com/category/chart-of-the-day"> </a></td></tr><tr><td><a href="http://www.businessinsider.com/category/chart-of-the-day"></a></td><td><a href="http://www.businessinsider.com/chart-abenomics-is-working-2013-8"></a></td></tr></tbody></table></div><p>Earlier, we presented a big run-down of <a href="http://www.businessinsider.com/the-state-of-the-world-economy-2013-9">the state of the world economy</a> showing how countries have been performing of late according to their newly released August purchasing managers index (<keyword id="104215" type="ORGANIZATION" weightage="60" keywordseo="PMI">PMI</keyword>) reports.</p>
<p>Deutsche Bank just published a chart that captures all of that in a single image.</p>
<p>Any country above the dotted line is improving at an accelerating pace.</p>
<p>As you can see, the developed economies are trouncing the developing ones.</p>
<p>This also happened to be echoed this morning by the OECD, <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=newssearch&amp;cd=1&amp;cad=rja&amp;ved=0CCoQqQIoADAA&amp;url=http%3A%2F%2Fwww.reuters.com%2Farticle%2F2013%2F09%2F03%2Fus-oecd-economy-idUSBRE9820AG20130903&amp;ei=gM8lUo-XI--44APIlYGYCA&amp;usg=AFQjCNHwUKXLvADsaYzBuouOXS_opgklxg&amp;sig2=zz3cYXfI1CFN9ZIPJOXhuQ&amp;bvm=bv.51495398,d.cWc">which revised its year-end GDP projections for almost all major European economies upward.</a></p>
<p>Here are four key takeaways from Deutsche Bank:</p>
<ul>
<li>"Positive momentum with data on an improving trajectory across key economic regions, except EM"</li>
<li>"EM: data weakness due to country-specific structural challenges and liquidity concerns driven by Fed tapering speculation"</li>
<li>"Eurozone: positive Q2 growth marked an end to the longest recession in region's history"</li>
<li>"China: slowdown fears reduced on the back of improving recent data"</li>
</ul>
<p>Check it out:</p>
<p><div class="image-container"><div class="image"><p class="source">Deutsche Bank</p></div></div></p>

CHART OF THE DAY: The State Of The World Economy

<p>The world economy has been letting us down for years, a new report suggests, and there's a lot of blame to go around.</p><p>The disappointing reality was laid out in a chart from Macquarie that compared the actual gross-domestic-product growth from 2011 to 2016 with the five-year outlook from the International Monetary Fund. The world undershot growth expectations by 9 percentage points, growing 22% over the time frame instead of 31% as projected.</p><p>The letdown was widespread, with regions as varied as the eurozone and India contributing to the shortfall in world GDP. The biggest shortfall (outside the catchall "Rest of world") in terms of total growth has been China, while the largest in terms of percent growth was the 29% miss by Brazil.</p><p>While the disappointment can probably be blamed in part on poor prognosticating by the IMF - its global GDP growth chart is <a href="http://www.businessinsider.com/imf-global-economic-revisions-2016-2">a fishhook collection of economic sadness</a> - it also speaks to how many maladies have befallen the world's economy since the global financial crisis.</p><p><span>Overall, the results are not encouraging.</span></p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Macquarie</span></p></div><p></p></div></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/study-found-link-between-personality-having-sex-2016-6">People with these personality traits have more and better sex</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="I2dWJ5MzE6oHPyMm2AZsNUXflC0CPwit" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

The depressing reality of the world economy in one chart

<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Business Insider/Matthew Boesler (data from Bloomberg)" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/533adae7ecad044651cebd6c-960/pmi-chart.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Business Insider/Matthew Boesler (data from Bloomberg)</span></p></div><p></p></div></div></p>
<p>French manufacturing appears to be making a comeback.</p>
<p>The country's manufacturing Purchasing Managers Index, a survey-based indicator of momentum in the goods-producing sector compiled by Markit, posted the biggest rise of any major economy in the first quarter of 2014, advancing to 52.1 from 47.0.</p>
<p>"The French manufacturing sector delivered a much-improved performance in March, buoyed by solid growth of new orders," said Jack Kennedy, a senior economist at Markit, in a <a href="http://www.markiteconomics.com/Survey/PressRelease.mvc/af898c044ea5428885e085ff7ae49690">press release</a>. "With the sector having finally moved into expansion territory following a prolonged spell of weakness, firms will be looking for signs of a convincing recovery taking hold before looking to boost areas such as employment. If input prices continue to fall, French manufacturers may look to gain a competitive edge through cutting output prices."</p>
<p>Readings below 50 on the index indicate varying degrees of contraction in activity, whereas readings above 50 indicate varying degrees of expansion, and a 50 reading implies no change from the previous month.</p>
<p>Chart 1 shows <a href="http://www.markiteconomics.com/Public/Page.mvc/PressReleases">just-released March manufacturing PMI data</a> for all of the countries tracked by Markit.</p>
<p>Ireland, the Czech Republic, and the United States all clocked in at 55.5, meaning manufacturing growth in those countries outpaced that in the rest of the world last month.</p>
<p>France, Spain, and Ireland saw the biggest increase in their respective PMIs relative to three months ago, marking the most-improved manufacturing sectors in the first quarter of 2014.</p>
<p>Russia, China, and Greece are the only countries sub-50 (contractionary) PMI readings, while Russia and China claim the only manufacturing sectors where not only is manufacturing activity contracting, but the pace of contraction is accelerating.</p>
<p>Most countries currently fall under the category of those with manufacturing sectors that continue to expand, but are experiencing a slowdown in the pace of expansion. These countries are shown in the lower-right quadrant of the chart.</p>

The World's Hottest Economies

<p><div class="KonaFilter image-container float_right"><div class="image on-image"><p class="source"><span>REUTERS/Issei Kato</span></p></div><p></p></div>Since coming to power in December 2013, Japanese prime minister Shinzo Abe has advocated a string of aggressive policy measures, dubbed Abenomics, to bolster the economy, stoke inflation, and improve global competitiveness via a weaker yen. </p>
<p>Abenomics for a long time was successful in depressing the yen. It went from about 82 yen to a dollar in December 2012, to 105.3 yen to a dollar in January 2014.</p>
<p>Year-to-date however the U.S. dollar is down 3.7% against the yen.</p>
<p>Richard Bernstein, CEO of Richard Bernstein Advisors, thinks the only real story in Japan is the yen.</p>
<p>"The competitive advantage has been whittled away through demographics, through productivity, through better competitiveness in other emerging market," Bernstein said at a breakfast earlier today. "What's left is currency. If you have no competitive advantage, this is true of every country, how do you compete? You compete on price."</p>
<p>Bernstein dubbed Japan's strategy, the Walmart strategy. Walmart he explained uses cheap prices to gain market share, and that was the story in Japan for a year and a half. But the yen has now started to appreciate. </p>
<p>"Think about what would happen to Walmart's stock price if it started raising prices," he said. "They'd have no competitive advantage. This is a market share game for them. So look what happened, the yen started appreciating - Walmart raising prices - and the Nikkei goes down, that's it. That's all you have to know."</p>
<p>Bernstein said back in the 1980s there was little correlation between the yen and the stock market, but that changed.</p>
<p><div class="KonaFilter image-container display-table float_left"><div><div class="image"><p class="source"><span><a href="http://www.bloomberg.com/quote/JPYUSD:CUR/chart">Bloomberg</a></span></p><p class="caption">Here's the yen falling against the dollar.</p></div><p></p></div></div>"The one arrow, two arrow, three arrow, four arrow stuff is great politics, but I don't think it makes any difference," he said.</p>
<p>Bernstein was making reference to the names of various parts of Abenomics. Arrow one, is a fiscal stimulus, arrow two involves aggressive monetary easing, and arrow three drives structural reforms driven at improving economic competitiveness.</p>
<p>While Bernstein does think the other arrows will bring back the competitive advantage eventually, he doesn't think it will do much for profitability or stocks in the next 12 to 15 months. </p>
<p>He also said that the Bank of Japan doesn't realize that the odds are stacked against them because whenever there's a problem in emerging markets, the yen is seen as a safe haven, which causes it to strengthen.</p>
<p>"In the next 12-24 months as an investor you just want to look at the yen. That will tell you the whole story for Japan," he said. "It's just Walmart, that's all there is."</p>

 Japan Is Now The Walmart Of The World Economy

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="http://www.flickr.com/photos/21966325@N00/401070534/">Flickr / Mick_tn</a></span></p></div><p></p></div></div>Low oil prices are usually great for the world economy.</p><p>After all, low oil means it's cheaper for companies to export goods, less expensive for people to run their cars and should boost spending across the board.</p><p>However, analysts at Hermes Investment Management warned in a note titled "The confusing price of oil" that there is no evidence of this happening.</p><p>In fact there are some crazy things happening in the world's markets right now that show that the global economy is being impacted negatively from low oil (emphasis ours):</p><p style="padding-left: 30px;"><strong>Traditionally we have believed that oil price declines would provide a net positive boost for the world economy</strong>, the balance between a negative effect on the growth of exporters more than offset by a positive effect for importers of the commodity.</p><p style="padding-left: 30px;"><strong>For lower oil prices to feed through to positive economic growth, one would typically expect a boost in spending, but we have not seen any evidence of that this time</strong> - rather, public investment has been falling, and many countries have no capacity for any additional borrowing that could provide the necessary stimulus.</p><p>Country officials and central bankers, like <a href="http://uk.businessinsider.com/bank-of-england-mark-carney-on-low-oil-prices-2016-1">Bank of England Governor Mark Carney, have claimed low oil prices are a net benefit for the economy</a>.</p><p>Carney's point is that, for Brits and others in the developed world, it's largely a good thing. As oil prices fall, so do petrol prices. That boosts car sales and also means consumers have more money in their pockets to spend on other goods and services, boosting growth.</p><h2>Two things which are hindering low oil prices helping the economy</h2><p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>REUTERS/Borja Suarez</span></p><p class="caption">Workers fill a bucket with spilled oil at Cabron beach, in Spain's Canary Island of Gran Canaria July 16, 2014. The origin of the oil spill is still unknown.</p></div><p></p></div></div>Oil prices are currently hovering around he $40 per barrel mark - over a 60% drop from the triple figures last seen in June 2014.</p><p>However Hermes points out there are some dislocations in market fundamentals that are preventing the benefits from filtering through:</p><p style="padding-left: 30px;">1. <strong>"The size of the current decline has had a significant direct effect on capital expenditure in the oil and gas sectors too, with knock-on effects to other parts of the economy"</strong> - for example, it's putting companies out of business and <a href="http://uk.businessinsider.com/shell-chief-executive-10000-will-be-cut-2016-1">leading to huge numbers of layoffs at giants like Shell</a>. It's also depressing spending power in oil-dependent emerging markets like Brazil, <a href="http://uk.businessinsider.com/unilever-2015-results-year-ahead-set-to-be-tougher-with-high-volatility-2016-1">where consumer-facing companies such as Unilever get a lot of their sales from</a>.</p><p style="padding-left: 30px;">2. "<strong>A</strong><strong>ll major central banks have been pursuing unconventional monetary policy of one form or another - this has left them in a position of not being able to further lower rates to support growth alongside the reduction in oil price</strong>" - for example, six central banks, including the European Central Bank and the Bank of Japan, have implemented negative interest rates which carry a huge risk of <a href="http://www.businessinsider.com/scott-mather-on-negative-interest-rates-2016-2">disproportionately impacting banks rather than serving as a boost to the economy</a>.</p><p>All in all, it's looking pretty bleak for world economy if oil prices stay this low because the markets and economy are not reacting in a way that analysts had hoped and predicted for in the past.</p><p>"This current episode of lower oil prices has come at an unusual, and to some extent unprecedented, time for the global economy," said Hermes analysts in the note.</p><p>"As such we have seen unexpected dislocations and feedback loops that require us to reconsider the effects of lower oil prices, at least in the short term."</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/game-of-thrones-economics-westeros-iron-throne-lannisters-2016-4">This hidden subplot of 'Game of Thrones' spells out the real trouble for the Lannisters</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="tvNncydDrkw0Adz4yS0Vsg8DPK1cte-i" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

There's no evidence that low prices are boosting the world economy

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Adam Berry/Getty Images</span></p><p class="caption">The knitted sculpture 'Superman' by Patricia Waller, featuring the comic book character meeting death by his own superhuman ability to fly, hangs in the 'Broken Heroes' exhibition at the Deschler Gallery on April 26, 2012 in Berlin, Germany.</p></div><p></p></div></div>With economies from Brazil to China to South Africa struggling, the US consumer has been touted as the main driver of global growth.</p><p>Unfortunately, American shoppers just can't cut it anymore.</p><p>"The US consumer alone does not have the ability to right the ship," Chief Market Strategist Joe Quinlan at Bank of America Merrill Lynch's US Trust division told Business Insider.</p><p>"That means the US consumer can't drag the rest of the world back to growth. The rest of the world is getting a free ride off of us right now, but they are going to have to help themselves."</p><h3>"Just isn't the powerful global engine it once was"</h3><p>In a report on Thursday, Quinlan laid out the case that the US consumer no longer makes up a big enough piece of the global economy to keep everything afloat.</p><p>For example, the US share of both total imports and personal consumption expenditures have fallen. In trade, the US once represented 20% of the world's imports, now that is just 13%.</p><p>However, with economies and markets outside of the US struggling, American consumers are being asked to do more than they can, in Quinlan's view. </p><p>"Consumption-led growth will help the U.S. economy expand by 2-2.5% again this year," wrote Quinlan. "That's good but not good enough for cyclical and structural reasons to prevent further downward pressure on global growth. The U.S. consumer just isn't the powerful global growth engine it once was."</p><p><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span>BAML/US Trust</span></p></div><p></p></div></div></p><p>But it's not all bad, according to Quinlan. Right now consumers are dealing with issues such as paying down debt, rising healthcare costs, and slower wage growth. And in order to be as important to the global economy as they once were, Quinlan said consumers would have to go down a dangerous path.</p><p>"I wouldn't want us to be the single driver anymore," he told us. "That would drive up debt tremendously and mean the US consumer would be less healthy in the future. That's dangerous."</p><h3>"Serious changes"</h3><p>To Quinlan, for the US to stay safe developing economies will have to pick up a heavier amount of the global growth load.</p><p>"These economies need to make serious changes," Quinlan said. "They need tax reform, serious infrastructure investments and build outs, investments in growing local business."</p><p>"[The world economy] is too central bank dependent, not just the US, but globally," he told us. "You can't debase your currency to growth."</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Buddhika Weerasinghe/Getty Images</span></p></div><p></p></div></div></p><p>The biggest threat if these economies don't begin to make changes, said Quinlan, is an economic hard landing in China. In that scenario the country could drag the entire world, including the US, into a global recession.</p><p>"China and the US are now the two big boys of the global economy in terms of imports, consumption, and growth," he said. "If China has a hard landing, there is a good chance that the world could end up in a recession. We can't take the place of or substitute for China if they go down."</p><p>Quinlan said that he expects that the Chinese government can stabilize its economy, noting that the government still has "a lot of financial firepower" including trade and current account surpluses. But without changes from other emerging economies the risks are still high.</p><p>As for the near-term outlook in the US, Quinlan thinks the recession fears "are overdone," citing the strength of consumers.</p><p>So while American shoppers can certainly keep the US chugging along right now, they won't be enough to help the world regain a growth path in the future.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/uber-might-owe-you-money-after-lawsuit-class-action-refund-car-service-2016-2">Uber agrees to pay $28.5 million to riders - see if you may be eligible for a refund</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="xmbXh1MDE6pq8wqXafr1MygACviTPxDf" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

US consumers can't save the world economy

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div>The world economy will witness modest growth in the next few years but it could be derailed by financial and policy instability, according to the <span>Organisation for Economic Cooperation and Development.</span></p><p>"Global GDP growth is projected to increase, rising from just under 3% in 2016 - the slowest pace since 2009 - to 3.3% in 2017 and around 3½ percent in 2018," the OECD said in its <a href="http://www.oecd.org/eco/outlook/Will-risks-derail-the-modest-recovery-OECD-Interim-Economic-Outlook-March-2017.pdf">interim economic outlook</a>, released on Tuesday.</p><p>However, the "disconnect between financial markets and fundamentals, potential market volatility, financial vulnerabilities and policy uncertainties," could derail growth, it warned.</p><p>The organization went on to explain each of these risks further.</p><p><strong>Shaky fundamentals</strong></p><p>"Equity valuations have increased significantly further in many major markets over the past six months, despite the large rise in nominal interest rates and with long-term nominal and real GDP growth expectations based on consensus forecasts barely changed," it stated.</p><p>The S&amp;P 500 has rallied more than 8% since September but has recently begun to flash some warning signs. Declining volumes, a mismatch between volatility expectations and economic uncertainty, and a <a href="http://www.businessinsider.com/flattening-yield-curve-warning-sign-for-stocks-2017-3">flattening yield curve</a> are among the signs the stock market rally could be nearing an end.<div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div></p><div title="Page 6"><p><strong>Exchange rate volatility</strong></p><p><span>Additionally, "financial market expectations imply that a large divergence in short-term interest rates between the major advanced economies will open up in the coming years," OECD warned. "This raises the risk of financial market tensions and volatility, notably in exchange rates, which could lead to wider financial instability."</span></p><p><span>The <a href="http://www.businessinsider.com/us-dollar-bull-market-america-2017-3">strength of the US dollar</a>-owing to expectations of higher growth and multiple rate hikes-has highlighted <a href="http://www.businessinsider.com/negative-effects-of-stronger-us-dollar-2016-12">risks facing emerging economies</a>. Many even worry about <a href="http://www.businessinsider.com/wall-street-is-talking-about-another-taper-tantrum-2016-9">a repeat of 2013</a>, when tightening by the US Federal Reserve caused disruptive capital outflows from emerging economies.</span></p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div></p><div title="Page 6"><p><strong>Financial vulnerabilities</strong></p><p><span>"Significant financial vulnerabilities arise from the overreliance on monetary policy in recent years," the outlook stated, "which has led to an extended period of exceptionally low interest rates, rising debt levels in some countries, elevated asset prices and a search for yield."</span></p><p><span>The IMF noted in October that the <a href="http://www.businessinsider.com/the-world-now-has-152-trillion-in-debt-2016-10">world's debt load is the highest it has ever been</a>, and investing legend Bill Gross warned that <a href="http://www.businessinsider.com/bill-gross-world-debt-is-like-us-prison-system-2016-12">the US is in a debt trap</a> that was created by the Federal Reserve.</span></p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div></p><p><strong>Policy uncertainty</strong></p></div></div><div title="Page 8"><div><div><p><span>The OECD stated that "falling trust in national governments and lower confidence by voters in the political systems of many countries can make it more difficult for governments to pursue and sustain the policy agenda required to achieve strong and inclusive growth."</span></p><p><span><a href="https://www.businessinsider.nl/albert-edwards-scariest-chart-in-the-world-2016-12/">Uncertainty over economic policy has skyrocketed</a> since Brexit and the US election, but markets have rallied <a href="https://www.bloomberg.com/news/articles/2017-02-03/vanguard-warns-of-trump-sugar-high-as-investors-ignore-risks">conveniently ignoring the potential risks</a>. The upcoming elections in France, Germany, and Netherlands also pose the risk of a <a href="http://www.cnbc.com/2017/02/12/imf-christine-lagarde-europe-france-germany-netherlands-elections-worried-populist-parties.html">further populist uprising in Europe</a>.</span><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div></span></p></div></div></div><p>It is worth noting that OECD's projected growth outlook is still below pre-crisis levels. "While the modest pick-up is welcome, it would still leave global GDP growth below the historical average of around 4% in the two decades prior to the crisis," the OECD said.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/side-effects-brain-body-drugs-adderall-recreationally-adhd-pill-2017-2">What happens to your brain and body if you use Adderall recreationally</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="FtY3hzOTE6I-lLvh74cjJwaK2QnBUvzk" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

OECD: There are 4 big risks facing the world economy

<p>Here's a handy chart from Oppenheimer's John Stoltzfus.</p>
<p>It reminds us that a little bit of growth in the U.S. will go a lot farther than a lot of growth out of China.</p>
<p>And don't forget: Japan is the world's third largest <keyword id="34412" type="ORGANIZATION" weightage="60" keywordseo="economy">economy</keyword>, which shows just how high the stakes are as the country's leaders embark on extremely aggressive monetary policy.</p>
<p>"Germany’s 4th place position and relative size to the top three economies adds credence, in our view, to expectations that the <keyword id="133587" type="ORGANIZATION" weightage="40" keywordseo="European-Monetary-Union">European monetary union</keyword> and its singular currency (the euro) will outlast skeptics," added Stoltzfus. "In aggregate the countries of the EMU, even in austerity and recession, nearly rival the size of the US economy."</p>
<p><div class="image-container display-table"><div><div class="image"><p class="source">Oppenheimer</p></div></div></div></p>

The 40 Biggest Economies In The World

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div>Some countries bounced back relatively quickly after the global financial crisis, b<span style="line-height: 1.5em;">ut others aren't doing so hot.</span></p><p>"Worryingly, the stalled recovery in some high-income economies and even some middle-income countries may be a symptom of deeper structural malaise," Kaushik Basu, the World Bank's chief economist and senior vice president, wrote. "What is critical is for nations to use this window to usher in fiscal and structural reforms, which can boost long-run growth and inclusive development."</p><p>We compiled a list of 10 countries with the slowest projected annual growth rate, or CAGR, from 2014 through 2017 based on the forecasts from the <a href="https://www.worldbank.org/en/publication/global-economic-prospects">World Bank's Global Economic Prospects</a>.</p>

The 10 slowest economies in the world

<ul><li><strong><keyword id="4227452" type="General" weightage="80" keywordseo="georgieva" source="Orion">Georgieva</keyword> noted that an integrated economy led to the tripling of the <keyword id="72243" type="General" weightage="20" keywordseo="WORLD-ECONOMY" source="Orion">world economy</keyword> in the last decades. </strong></li><li><strong>Georgieva said that a simulation showed that for advanced economies, global economic fragmentation would mean a loss of 2 per cent of output. </strong></li><li><strong>That was also a message coming from small advanced economies, Georgieva noted. </strong></li></ul><br />There is a risk of geopolitical fragmentation, as geopolitics turn into geo-economics with negative impacts, warns International Monetary Fund (<keyword id="6355408" type="General" weightage="100" keywordseo="imf" source="Orion">IMF</keyword>) Managing Director Kristalina Georgieva.<br /><br />"Emerging markets and developing countries have stressed that for them, it is paramount that they have the opportunity to drive growth and employment on the basis of a more integrated global economy," Georgieva said at a press conference during the IMF and <keyword id="6354424" type="General" weightage="20" keywordseo="world-bank" source="Orion">World Bank</keyword> annual meetings in response to a question from <keyword id="106387" type="General" weightage="20" keywordseo="xinhua-news-agency" source="Orion">Xinhua news agency</keyword>.<br /><br />That was also a message coming from small advanced economies, Georgieva noted, referring to the meeting of the International Monetary and Financial Committee (<keyword id="165152" type="General" weightage="20" keywordseo="imfc" source="Orion">IMFC</keyword>), the policy advisory committee of the IMF Board of Governors.<br /><br />"The predominant mood in the room was we cannot possibly allow fragmentation to happen because everybody would be poorer, but it would be devastating for low-income and, for emerging markets and developing economies," said the IMF chief.<br /><br />Georgieva said that a simulation showed that for advanced economies, global economic fragmentation would mean a loss of 2 per cent of output, while for emerging markets and developing economies, it could be 10 to 15 per cent.<br /><br />Nadia Calvino, Spain's first vice president and minister for economy and digitalization, who is the chair of the IMFC, also highlighted the risk of fragmentation.<br /><br />In the Chair's Statement of the 46th Meeting of the IMFC, Calvino said the global economy is subject to increased fragmentation risks and the IMFC reiterates its call for greater international cooperation to prevent fragmentation and safeguard global economic integration.<br /><br />Looking back, Georgieva noted that an integrated economy led to the tripling of the world economy in the last decades, in which emerging markets and developing economies quadrupled, and advanced economies doubled.<br /><br />"So if we want to have a secure future, we do need to retain that efficiency that comes from an integrated economy," she added.<br /><br />SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/bajaj-autos-q2-net-profit-up-20-but-analysts-expect-more-pain-in-exports/articleshow/94863948.cms">Bajaj Auto’s Q2 net profit up 20% but analysts expect more pain in exports</a><br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/5-3-bn-mobile-phones-will-become-waste-this-year-warn-experts/articleshow/94859499.cms">5.3 bn mobile phones will become waste this year, warn experts</a><br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tvs-motor-becomes-more-valuable-than-its-peer-hero-motocorp/articleshow/94863107.cms">TVS Motor becomes more valuable than its peer Hero MotoCorp</a>

IMF chief warns of risk of geopolitical fragmentation

In 2024, the <keyword id="7952869" type="General" weightage="20" keywordseo="largest-economies-in-the-world" source="Orion">largest economies in the world</keyword> are the United States, China, Germany, Japan, and India, based on their GDP. GDP, or Gross Domestic Product, is an important measure of how big a country's economy is. One common way to calculate GDP is by adding up all the money spent on new consumer goods, new investments, government spending, and the value of exports minus imports. This article will look at the <keyword id="22151442" type="General" weightage="20" keywordseo="ten-biggest-economies" source="Orion">ten biggest economies</keyword> in the world in 2024, according to <a href="https://www.forbesindia.com" data-type="tilCustomLink" target="_blank">Forbes</a>, based on their GDP.<br /><br /><cmsannotation type="cmsannotation" annotationid="World's largest economies by GDP" comment="subhead" text="World's largest economies by GDP"><span data-til="noop">World's <keyword id="8471222" type="General" weightage="20" keywordseo="largest-economies-by-GDP" source="Orion">largest economies by GDP</keyword></span></cmsannotation><br /><table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">Rank<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">Country<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">GDP (USD billion)<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">GDP Per Capita (USD thousand)<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">1<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">United States Of America (U.S.A)<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">28,783<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">85.37<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">2<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">China<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">18,536<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">13.14<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">3<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">Germany<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">4,590<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">54.29<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">4<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">Japan<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">4,112<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">33.14<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">5<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">India<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">3,942<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">2.73<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">6<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">United Kingdom (U.K.)<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">3,502<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">51.07<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">7<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">France<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">3,132<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">47.36<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">8<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">Brazil<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">2,333<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">11.35<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">9<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">Italy<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">2,332<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">39.58<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">10<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">Canada<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">2,242<br /><br /></td><td style="border-left:solid #000000 0.62499975pt;border-right:solid #000000 0.62499975pt;border-bottom:solid #000000 0.62499975pt;border-top:solid #000000 0.62499975pt;vertical-align:middle;background-color:#ffffff;padding:6pt 6pt 6pt 6pt;overflow:hidden;overflow-wrap:break-word;">54.87<br /><br /></td></tr></tbody></table><br /><cmsannotation type="cmsannotation" annotationid="1. United States of America (U.S.A.)" comment="subhead" text="1. United States of America (U.S.A.)"><span data-til="noop">1. United States of America (U.S.A.)</span></cmsannotation><br />The United States has been the world's largest and richest economy since 1960. Its economy is very diverse, with important sectors like services, manufacturing, finance, and technology driving its growth. The country benefits from a large consumer market, encourages innovation and entrepreneurship, has a strong infrastructure, and offers good business conditions.<br /><br /><cmsannotation type="cmsannotation" annotationid="2. China" comment="subhead" text="2. China"><span data-til="noop">2. China</span></cmsannotation><br />China's economy has grown significantly, rising from fourth place in 1960 to second place today. Its economy mainly relies on manufacturing, exports, and investment. China benefits from a large workforce, strong government support, improved infrastructure, and a rapidly growing consumer market.<br /><br /><cmsannotation type="cmsannotation" annotationid="3. Germany" comment="subhead" text="3. Germany"><span data-til="noop">3. Germany</span></cmsannotation><br />Germany's economy is heavily based on exports and is famous for its expertise in engineering, automotive, chemical, and pharmaceutical industries. It benefits from a skilled workforce, strong research and development, and a strong focus on innovation.<br /><br /><cmsannotation type="cmsannotation" annotationid="4. Japan" comment="subhead" text="4. Japan"><span data-til="noop">4. Japan</span></cmsannotation><br />Japan's economy is known for its advanced technology, strong manufacturing, and service industries. Key sectors include automotive, electronics, machinery, and finance. Japan is also recognised for its strong work ethic, innovative technology, and high-quality exports.<br /><br /><cmsannotation type="cmsannotation" annotationid="5. India" comment="subhead" text="5. India"><span data-til="noop">5. India</span></cmsannotation><br />India is the 5th largest economy in the world in 2024. Its economy is diverse and growing quickly, driven by key sectors like information technology, services, agriculture, and manufacturing. India benefits from a large domestic market, a young and tech-savvy workforce, and a growing middle class.<br /><br /><cmsannotation type="cmsannotation" annotationid="6. United Kingdom (U.K.)" comment="subhead" text="6. United Kingdom (U.K.)"><span data-til="noop">6. United Kingdom (U.K.)</span></cmsannotation><br />The United Kingdom's economy includes a mix of services, manufacturing, finance, and creative industries. London is a global financial centre that attracts foreign investments. Trade partnerships and globalisation also contribute to the UK's economic growth.<br /><br /><cmsannotation type="cmsannotation" annotationid="7. France" comment="subhead" text="7. France"><span data-til="noop">7. France</span></cmsannotation><br />France's economy is diverse, focusing on industries like aerospace, tourism, luxury goods, and agriculture. France is known for its strong social welfare system, good infrastructure, and significant investment in research and development.<br /><br /><cmsannotation type="cmsannotation" annotationid="8. Italy" comment="subhead" text="8. Italy"><span data-til="noop">8. Italy</span></cmsannotation><br />Italy has a well-developed economy and is the third-largest in the European Union. The country is known for its strong and innovative business sector, as well as its competitive and hardworking agricultural industry.<br /><br /><cmsannotation type="cmsannotation" annotationid="9. Brazil" comment="subhead" text="9. Brazil"><span data-til="noop">9. Brazil</span></cmsannotation><br />Brazil's economy includes many sectors like agriculture, mining, manufacturing, and services. It's well-known globally for its agriculture, which means growing and selling crops and exporting them. The economy grows because of things like how much things cost, how much people in the country buy, and how well they build roads and buildings.<br /><br /><cmsannotation type="cmsannotation" annotationid="10. Canada" comment="subhead" text="10. Canada"><span data-til="noop">10. Canada</span></cmsannotation><br />Canada's economy depends a lot on its plentiful natural resources like oil, gas, minerals, and timber. It also has a strong services sector, which means businesses that provide services rather than goods, a well-developed manufacturing industry, and a strong commitment to encouraging new ideas and improvements in technology.<br /><br />SEE ALSO:<br /><a href="https://www.businessinsider.in/thelife/personalities/article/top-10-most-richest-women-in-the-world/articleshow/110941545.cms" data-type="tilCustomLink" target="_blank">Top 10 richest women in the world in 2024</a><br />

Top 10 largest economies in the world in 2024

<p><span class="KonaFilter image-container display-table float_right"><span><span data-post-image="" class="image on-image"></span><p></p></span></span>HSBC's Stephen King is already thinking about the next recession.</p>
<p>In a note to clients on Wednesday, HSBC's chief economist wrote that the world economy has a "titanic problem" because, King writes, there&#xa0;<span style="line-height: 1.5em;">aren't enough lifeboats to go around when the world economy sinks again.</span></p>
<p><span style="line-height: 1.5em;">Here's King:</span></p>
<p style="padding-left: 60px;">"<strong>Whereas previous recoveries&#xa0;have enabled monetary and fiscal policymakers to replenish&#xa0;their ammunition, this recovery - both in the US and&#xa0;elsewhere - has been distinguished by a persistent munitions&#xa0;shortage. This is a major problem</strong>. In all recessions since the&#xa0;1970s, the US Fed funds rate has fallen by a minimum of&#xa0;5 percentage points. That kind of traditional stimulus is now&#xa0;completely ruled out."</p>
<p>King notes that this far into the recovery, there's a lack of "traditional policy ammunition."&#xa0;<span style="line-height: 1.5em;">For instance, t</span><span style="line-height: 1.5em;">reasury yields <a href="http://www.businessinsider.com/chart-of-interest-rates-since-16th-century-2015-5">have not risen</a>, the budget deficit is not falling, and welfare payments are still on the rise.&#xa0;</span></p>
<p>As for what might trigger the next recession, King highlighted these are the four things:</p>
<ul>
<li>The wage growth we've all been waiting for will hurt corporate earnings and reduce the share of corporate profit contributing to US GDP (it also doesn't help that <a href="http://www.businessinsider.com/productivity-in-america-is-unusually-low-2015-5">worker productivity is low</a>.) In turn, households and businesses will lose confidence in the economy, and the "equity bubble" will burst with collapsing stock prices.</li>
<li>Non-bank financial systems like insurance companies and pension funds will increasingly not be able to meet future obligations. This will cause a huge demand for liquid assets, forcing people to rush to sell despite no matching demand, triggering a recession.</li>
<li>Forces beyond the Federal' Reserve's control, including the possibility that China's economy and its currency could collapse. Weak commodity prices could also cause collapses in several emerging markets, as could continued strength in the US dollar.</li>
<li>The Fed could cause the next recession by raising interest rates too soon, repeating the mistakes of the European Central Bank in 2011 and the Bank of Japan in 2000.</li>
</ul>

HSBC thinks the world economy has a 'titanic problem'

<br />
In the <a href="http://www.businessinsider.in/searchresult.cms?query=world+economy">world economy</a>, the importance of the <keyword id="175647" type="UNKNOWN" weightage="100" keywordseo="service-sector">service sector</keyword> cannot be overstated. The share of services in the <keyword id="72243" type="ORGANIZATION" weightage="100" keywordseo="World-economy">world economy</keyword> stands at 66% in 2013. The sector also accounted for 45.1% of the jobs in the world economy in 2013 according to estimates by the <a href="http://www.businessinsider.in/searchresult.cms?query=International+Labour+Organization">International Labour Organization</a> (ILO). Over the years from 2001 to 2013, the percentage share of service sectors’ contribution to <a href="http://www.businessinsider.in/searchresult.cms?query=GDP">GDP</a> has marginally declined from 68.8% in 2001 to 66% in 2013. It comes as a bit of a surprise as the share of employment has increased from 39.1% to 45.1% over the same period.<br />
<br />
Similarly, the importance of the service sector can also be gauged from the fact that service sector accounted for 19.8% of the world exports in 2013. It has mildly increased from 19.4% in 2001. Also, the sector is important from the point of view of Foreign Direct Investments, which is the largest source of cross-border flows in the world economy.<br />
<br />
An analysis of the service sector of various economies brings and interesting point to the forefront. The stage of the economy as also the per capita income levels determines the contribution to the GDP of an economy. High-income countries have the maximum contribution to the GDP by service sectors in their respective economies. India is a notable exception to the above-mentioned rule as it has roughly 58% contribution to the GDP coming from the service sector of the economy. It is exceptionally high and is even more than China, which is at least ten years ahead of India in the per capita income levels.<br />
<br />
The Indian service sector has been the growth driver for the Indian economy for the past 20 years. In 2014-15, 72.4% of the growth came from this sector. At a sub-national level too the service sector is the dominant sector. It has more than 40% share in GDP in all the states and Union territories (UT) barring the northeastern states of Sikkim and Arunachal Pradesh. Among the states and UT's Chandigarh and Delhi are UT's with more than 85% share of GDP coming from the service sector alone.<br />
<br />
There are a variety of services that come in the service sector ambit. The range of services is truly phenomenal. Service activities are a diverse bunch with services ranging from the very basic services like those offered by a barber to more complex ones like IT and some financial services. Under the NIC 2008 classification system of the economy, services have been classified into the following five broad areas. These include- (a) Trade, hotels, &amp; restaurants, (b) Transport, storage, &amp; communication (c) Financing, insurance, real estate, &amp; business services (d) Community, social, &amp; personal services and (e) Construction.<br />
<br />
Their relative share or contributions to the GDP and their respective growth rates over the years show an interesting trend. Financing, insurance, real estate, &amp; business are the biggest contributor in GDP followed by Trade, hotels, &amp; restaurants. Together they account for roughly 40% of the total gross value addition in the service sector. Exceptional growth is presently being witnessed in the trade and repairs sub-segment.<br />
<br /> <keyword id="44528" type="ORGANIZATION" weightage="100" keywordseo="FDI">FDI</keyword> in services has been a critical component of the services growth in the past 15 years or so. The share of services in the cumulative FDI Inflows over the period from April 2000- November 2014 is 53.8%. The majority of flows came to the financial and non-financial service sector, followed by construction development. From a period of April 2000- November 2014, these sectors attracted 65 billion US dollars of FDI. These accounted for a little over 27% of cumulative <a href="http://www.businessinsider.in/searchresult.cms?query=FDI">FDI</a> inflows during the same period.<br />
<br />
According to economic survey 2014-15, India has shown 'reasonably good performance' in different services like telecom, aviation, tourism, railways, and shipping on various performance parameters. In the telecom sector, India has roughly 91 crore telephone connections. Similarly, aviation services were rendered to 10 crore domestic and international passengers in 2013-14. In the tourism space, India is expected to receive a total of 7.5 million international tourists, which is expected to bring in 19.7 billion USD of foreign exchange earnings. Indian Railways similarly carried 1051 million tonnes of freight traffic in 2013-14. The port traffic of 975 million tonnes 2013-14 shows an increase of 125 million tonnes over the previous year reflecting a deepening shipping sector. The growth in these sub-sectors over the years shows the deepening of the services' sector and the importance it has in the growth and development of the Indian economy.<br />
<br />
In the coming years, services will continue to dominate the growth story. Even if the manufacturing sector picks up service sector importance will not diminish. It is because manufacturing has a multiplier effect in the economy with one manufacturing job creating a multiple of service sector jobs. The service sector growth is here to stay.<br />
<br />
(The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India. Amit Kapoor is Chair, Institute for Competitiveness &amp; Editor of Thinkers. The views expressed are personal. Amit can be reached at <a href="mailto:amit.kapoor@competitiveness.in">amit.kapoor@competitiveness.in</a> and tweets @kautiliya)<br />
<br />
Image credit: Indiatimes<br />

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