Economic Fortunes Mixed Around the World

The last few days have brought an on-rush of second quarter GDP reports from various countries around the world. Large countries have shown a mixed performance. Even as US growth was revised higher for that period, growth in Europe has slowed or turned negative. And, like the large economies, smaller economies have had a similar pattern. Of six recent GDP releases, three have been positive and three negative. In Europe, the Netherlands, much like neighboring Germany, saw its third noticeable decrease in a row, and in a "flash" estimate, Belgium reported a 0.1% decrease (quarterly rate), a downturn after five consecutive quarters of growth.

We noted here several days ago the contraction developing in the South Korean economy. Others in Asia are faring better, however, with the Philippines expanding 0.5% in the second quarter, a partial rebound from a first quarter drop. Growth in the Philippines was strong through much of last year, and the whipsaw in the first two quarters of 2003 seems mainly due to a wide swing in imports. Exports from this nation are rising, unlike many of the larger nations. Malaysia, too, had good growth in the second quarter, 1.7%, with strong consumption gains and an upturn in exports. Investment flattened, however, after three quarters of firm advances.

Elsewhere among emerging markets, Brazil saw a second consecutive quarter of decline as its economic woes continued through the spring. Domestic consumption and investment both suffered, although the trade accounts, exports and imports, provided some cushion. In South Africa, growth was modest; that nation reports its GDP on an industry basis, and agriculture and manufacturing exerted some drag, while service industries continued expanding.

This compilation of recent growth reports indicates that world economies are performing unevenly. There seems to be slight bias toward slowing, although outside Europe, this is due less to the declines in exports that plague that region.