The world’s largest economy – the US is the locomotive of global growth for the first time since the great recession and in the process boosting exports around the world, says the Chief Economist at IHF.
Nariman Behravesh adds, “Robust domestic demand growth, strengthening dollar, and rising oil production is propelling US growth and UK is also doing well, while the rest of world struggles.”
Behravesh was providing a preview into a presentation to be made at the Global Economic and Country Risk Conference to be held from November 11-12 in Washington, D.C.
He informs that global average growth will hit 2.5 percent, while the US will be at about 3.0 percent from a strengthening domestic demand and rising oil and gas output, which is cutting energy prices.
While at the same time, China’s domestic demand is decelerating, the lingering effect of its real estate crash.
The US dollar is at a four-year high, while the euro is steadily weakening, the Japanese yen is at its lowest level in six years and the Russian rouble has fallen 20 percent since January.
“The pendulum seems to have swung back from an environment in which just five years ago, emerging markets were the darlings of the global economy,” says Behravesh.
He adds, “While the locomotive role of the US is less powerful than it was a couple of decades ago, it has regained its role and possibly as the major driver of global growth.”
Though strengthening domestic demand is propelling US expansion, global trade is still a drag on the economy, a factor Behravesh notes, is helping economies in the rest of the world.
The diverse nature of US imports has an impact on a large group of countries, developed and emerging alike.
US oil and gas output has surged about 30 percent since 2010, spurring job growth, providing a competitive stimulus to manufacturing and a much smaller drag from trade.
Rising US production is a major force in stabilizing global energy markets, offsetting turmoil and disruptions caused by conflicts in Syria, Iraq, Libya, and between Russia and Ukraine.
Increased domestic oil production in the US has also been a major factor in driving down the cost of petroleum.
“Brent crude has fallen from around $125 per barrel in early 2012 to around $92 in early October, providing an important boost to oil-consuming countries around the world,” Behravesh informs.
