by Gavin Jackson and Keith Fray
On Tuesday the International Monetary Fund released its latest World Economic Outlook. A striking new finding emerges: the seven largest emerging markets are now bigger, in gross domestic product terms, than the long established G7 group of industrialised nations, when measured at purchasing power parity (PPP).
Tension between China and Japan over the East China Sea is threatening to disrupt the strong trade relationship between the two countries.
In July Japan exported a higher value of goods to China than to Europe or to north America. It also imported a higher value of goods from China than from north America and Europe combined, and about the same amount as from the rest of Asia combined.
Angela Merkel has been making much of Germany’s predominant role in the EU’s trade relationship with China – the oft-touted ‘special relationship’. The EU overtook Japan as China’s main source of imports back in 2011, and Germany is the biggest contributor to that. But Europe’s elevated status is not due to its own export growth; rather, it is due to Japan’s continuing performance slide.
Source: IMF/Haver Analytics
Markets promptly react to flash releases of economic indicators and large sums of money are lost or made based on zero-point-something percentage points of GDP growth. But, in the excitement of new economic data, it is worth remembering how data is subject to frequent and quite substantial revisions.
Notoriously, in 2010 Japan’s most watched economic indicator was drastically revised downwards, slicing off a full 3.5 percentage points from the annualised growth rate first reported for the third quarter of 2009, prompting soul searching about the quality of Japanese economic data. But revisions occur across many countries and not only after the flash releases.
An OECD database of the various edition of the monthly publication of the Main Economic Indicators (MEI) shows how widespread the issue is.
A new military spending forecast from analysts at IHS Jane’s Defence suggests that China’s defence spending will accelerate substantially in the next three years.
This interactive graphic examines defence spending and gross domestic product growth in the region – as well as showing contextual numbers for the US – the world’s biggest spender on defence.