Global economic growth rates are meaningless.

Nov 7
The general health of the world economy is becoming less relevant as it continues to collapse.

For the global rate of economic growth to be meaningfully determined, a large number of countries, or at least the majority of the global GDP, must move at widely distributed, even interlocking, rates.

The theory used to make sense because there were frequently several common factors that affected several countries in the same way, such as energy costs or China's economic growth. But rather than being influenced by global forces, future economic growth will depend more on local and national variables.

Using China as an example, the country's economy has grown at a rate of 8% or more for the majority of the last few decades, and despite all of its building projects, the Chinese people have an endless need for products and raw resources.

As a result, there were numerous booms everywhere, from the dairy farms of New Zealand to the machine tool manufacturers of Germany and the soybean fields of Brazil and Argentina. While not everything in these nations expanded in line with GDP, at least a few export-oriented industries did well and generated jobs.

China is becoming so large and expanding so quickly that the majority of the world has grown up alongside it. Even though the US manufacturing belt hasn't prospered, there's a good reason why many nations have warmed up to China in recent years.

Now, things are different. China reports growth rates of about 5%, but the majority of analysts don't think those figures are reliable. The yuan is weak, consumer prices are declining, exports are declining, the real estate surplus is still diminishing, and the government has stopped disclosing the high percentage of youth unemployment.
Longer-term issues include the nation's aging population and a declining labor force.
After considering everything that has been said, we can say that, regardless of China's actual economic growth rate, it is insufficient to boost the global economy.

Oil prices are the second systemic component that formerly propelled the world economy. Both in 1973 and 1979, when they peaked, a significant portion of the global economy experienced a recession because of geopolitical factors.

The energy landscape of today is entirely different. Since the US is now a significant oil exporter, rising oil prices have considerably less of an adverse effect on the US economy—in fact, they may even be beneficial.

After losing its natural gas supply from Russia, the European Union recently experienced a severe energy shock. However, in response, European nations increased savings and shifted to a combination of alternative gas sources and renewable energy sources.
Despite significant adverse economic pressures, the economies of the EU remained remarkably resilient. China is aggressively developing solar, nuclear, and, regrettably, coal technologies as it recognizes its reliance on imported gas and oil.

The truth is that shocks to energy prices currently affect the world economy far less than they did in the past, and this tendency will likely intensify as more affordable solar and wind energy become available. Fossil fuel prices, another systematic driver influencing the world economy, have therefore decreased.

Even if rising oil and gas prices will still have a significant negative impact on many developing nations and may result in significant humanitarian consequences, the economic fallout won't be significant enough to start a larger global recession.

In this new environment, national actions will play a larger role in determining a nation's success than global trends once these large-scale shared shocks have subsided.
The importance of culture and social trust will increase, as will an openness to innovation. The nation's capacity to handle immigration will also become more important if birth rates stay low or decline.

If a nation is unable to replenish its population with law-abiding and productive immigrants, it will endure a decrease in its relative GDP and probably several shocks along the way.

It will also be more challenging to come up with justifications for the lack of prosperity. There won't be a deglobalization of the world, but there will be some risk mitigation.

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