In discussing and analyzing markets and economies, it’s critical to maintain a global focus. Investors often are overwhelmed with data and news pertaining to local issues—and for good reason. If you live in America (or the UK, Germany, Djibouti), it’s understandable that US (or UK, German, Djiboutian) GDP (unemployment, corporate earnings, politics, etc.) may be utmost in your mind.
But economies—and capital markets—are heavily influenced by global forces. While so much focus and energy has been spent focusing on the handful of countries recently experiencing economic contraction—or on the precipice of potential contraction—what’s being overlooked?
Exhibit 1, a map of 2011 GDP growth, shows the vast majority of the world has been experiencing economic growth—and hasn’t seen contraction in recent quarters. Dark green is growth, light green is flattish or mixed growth over the past 2 quarters, red is contraction. The gray nations either don’t have data available and/or are relatively tiny economies. The upshot is most of the world is growing.
Exhibit 1: Global GDP Growth Map—2011
Sources: Fisher Investments Research, CIA World Factbook, Eurostat, International Monetary Fund. Plots calendar year 2011 real GDP growth.
In fact, real global GDP has already surpassed its pre-recession peak and, on balance, shows few signs of materially slowing in the period ahead.
Exhibit 2: Real Global GDP At All Time High
Sources: International Monetary Fund, World Economic Database.
Are there negatives to be found? Sure. But that’s always true—and has been throughout the current global economic revival. Taken in total, the world in aggregate has grown, and the points of strength far outnumber the points of weakness.