Friday, February 13, 2009

Really scary economic charts: world unemployment and growth

This article highlights how the financial crisis has spread like a disease throughout the world. Unemployment rates are rising, growth rates are declining, and the economic pain is felt globally.

The Financial Ninja does a series called Really Scary Fed Charts (here is his latest), highlighting the Fed's balance sheet since it starting growing under the credit easing policy (you can see JKA for a short description of CEP). Hopefully he won't mind that I copied his title - it's just too catchy.

G7 Growth rates are falling flat - Canada is the last man standing.

The chart illustrates annual growth across the G7 economies through Q4 2008 for Italy, Germany, U.K., U.S., and France, and through Q3 2008 for Japan and Canada. Canadian growth is still positive over the year, +0.53%, but may lose its status as "last man standing" when Statistics Canada releases its Q4 2008 GDP report. Growth was negative in October, -0.1%, and November, -0.7%.

G7 unemployment is rising...quickly.

The chart illustrates the annual change in the unemployment rate across the G7 economies (ex Italy because its latest release was in September). The December 2008 surge in unemployment in Canada, the U.S., an the U.K. has surpassed those in 2001: +1.4%, +2.7%, and +1.2%, respectively in December. Germany is an aberration, where it's unemployment rate remains at historical lows, 7.2%. But given the previous chart (on G7 growth), even German firms will eventually be forced to fire - income is just too low.

Enough about the G7 - growth rates across a larger set of countries (50) look scary, too: two charts comparing growth in 2008 to that in 2001.

The chart illustrates annual GDP (gross domestic product - the aggregate measure of domestic production) growth for a set of 50 economies using the latest available release. Across the board, there is a diversity in growth; this is a consequence of country-specific economic circumstance.

However, 18 economies posted negative annual growth rates, ranging from Latvia, -10.5%, to the U.S., -0.2%, and average growth across all 50 economies is 1.67%. And there are a lot of developed economies in this category: U.S., Italy, Japan, Iceland, France, Denmark, Netherlands, Belgium, to name a few; actually, most of them are. The downside risk to World growth is very high, and the number of contracting economies will likely grow in coming quarters.

This chart illustrates annual GDP growth across the same 50 economies - ranked from biggest decline to biggest increase - at the end of the last U.S. recession, Q4 2001. In 2001, 10 countries posted negative economic growth, ranging from Argentina, -10.5% to Austria, -0.5%, and the average growth rate was higher, 1.88%. And only four of them are developed economies: Austria, Belgium, Japan, and Turkey.

The World recession is taking hold, and few economies will remain untouched throughout this cycle. The IMF is projecting 0.5% World growth in 2009, but I wouldn't be surprised if that is revised downward, and below zero.

Rebecca Wilder

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