Shifting Patterns of Global Growth?

The current slowdown in the USA Economy has led many to question whether this will have a knock on effect in destroying global growth. This paper looks at the channels of global growth in 2008 to see whether the above view may be justified. In addition the paper draws on theories of globalisation and growth to explain recent trade patterns and makes suggestions on where growth is heading in the future. Data is used from world Economic Indicators to support the main arguments. Comparative profiles are then made of the important country players in global business. The evidence would suggest that countries both East and West are being to converge in their policy making though in the short term the current favourable growth of Eastern countries such as India and China will play a large part in maintaining positive global growth. On the negative side in January 2008 there was stock market turbulence in all world markets indicating the high degree of interconnectivity existing around the world in todays business environment. Furthermore much of the slowdown in the USA has been attributed to defaults on loans financed from the global capital markets. This financial crisis has a knock on effect in world markets and was caused by the banking system rather originating from problems in emerging markets as had often occurred in the past. In some ways even if the USA reduces interest rates rapidly to stimulate growth as has been done in January 2008 it does not mean that credit will automatically become easier. The LIBOR Rate will remain high as long as global banks fear lending to those with high risk of default. House prices in the USA and shares in banks have fallen almost 20% over the last year according to Bloomburg March 2008.