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The World Economy

The World Economy in 2010 was worth $74.007 trillion in GDP terms, using the Purchasing Price Parity (PPP) method of valuation. This is expected to grow to $78.092 trillion in 2011. The overall global economy averaged a 3.2 per cent growth rate between 2000 and 2007, suffering a slight dip in 2001 - 2002 thanks to the Dot Com Crash, but continuing to grow throughout that period. In fact 2004 - 2007 were boom years. The Emerging Markets, led by the giants of China, India, Russia and Brazil (the BRIC countries) had been posting 7 per cent - 10 per cent growth rates for years. Property and stock market booms had brought consistent growth in North America and Europe. Investment was bringing economic development to much of the Middle East and Africa, and even Japan was recovering from its deflationary 'Lost Years'. Economic conditions within these countries play a major role in setting the economic atmosphere of less well-to-do nations and their economies. In many aspects, developing and less developed economies depend on the developed countries for their economic wellbeing. Theories were even circulating that thanks to the growth of the developing world, we might enjoy years of unfettered growth, as new markets would go through successive growth spurts and counter the effects of slowing growth elsewhere. It was suggested that Asia was 'decoupling' from the US and able to grow under its own steam thanks to its two 'Awakening Giants'. Sadly, that turned out to be hogwash, as deregulation allowed western banks to build up unsustainable levels of debt that brought the global economy to the brink of depression. As the 'Sub-Prime' Crisis morphed into a fully fledged crash then global Financial Crisis, 2008 started to bomb and 2009 became the first year that the world recorded a loss in GDP since World War II. 2.031% was wiped out of the global economy - or $3.3 trillion of value. We are now in what the IMF calls a 'Two Speed Recovery Process'.

World GDP Growth by Country, 2010 Advanced economies have now shrunk as much as feared, but they are either growing slowly or stagnating, with unsustainable debt levels and persistently high unemployment. The US is continuing to stimulate its economy - although it seems more like giving free money to banks who then horde it - which continues to raise debt levels, while the Europeans, thanks to the Eurozone Crisis of 2010, are more focused on budget cuts, helping to reduce debts but keeping unemployment high with a chance of a second recession hitting (the so-called W-shaped recovery). Japan continues to struggle with high debt, a strong currency and deflation. There are exceptions, of course. Australia and Canada have both done well from rising commodity prices and well-managed banks, while the amazing German high-end export machine goes from strength to strength - putting further pressure on its Eurozone partners in the process. Developing economies, on the other hand, are experiencing strong growth, as they continue to invest in their own infrastruccture, grow overall exports, and start to see increased levels of consumption from the hundreds of millions that they pull out of poverty every year, the tens of millions that join the middle class, and the millions that join the ranks of the rich. This emerging market growth process is also leading to an urbanized planet. For the first time in 2010, the majority of the world's population lived in cities (50.5% or 3.417 billion people), and that number is growing by over 125 million people a year. This two-speed process has led to a rapid change of the politcal and economic power structure that has existed since the end of World War II.

During this period, we have seen China Overtake Japan as the world's second largest economy, and the replacement of the old G7/ G8 structure with the G20, bringing together the twenty most important economies from both the advanced and developing worlds. World Economic statistics for 2011: World GDP (PPP): $78.092 trillion GDP Growth Rate: 3.3% GDP Per Capita (PPP): $11,100 GDP By Sector: Services 63.4%, Industry 30.8%, Agriculture 5.8% Growth In Trade Volume: 6.953% Industrial Production Growth Rate: 4.6% Population: 6.768 billion Population Growth Rate: 1.133% Urban Population: 50.5% Urbanization Rate: 1.85% (125 million people move to cities every year) The Poor (Income below $2 per day): Approx 3.25 billion (~ 50%) Millionaires: Approx 10 million (~ 0.15%) Labor Force: 3.232 billion Inflation Rate - Developed Countries: 2.5% Inflation Rate - Developing Countries: 5.6% Unemployment Rate: 8.8%

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