Lexington, Mass. The US economy, the world’s largest, has emerged as the locomotive of global growth for the first time since the great recession and boosting exports from around the globe, according to Nariman Behravesh, Chief Economist, HIS.
Above is a preview of a presentation, to be made by Behravesh at the Global Economic and Country Risk Conference November 11-12 in Washington, DC, hosted by IHS Inc., (NYSE: IHS), the leading global source of critical information and insight.
The US economy is on solid footing, while the rest of the world, except for the UK which is also doing well, is struggling. Global average growth will hit 2.5 percent, while US will be at about 3 percent. Strengthening domestic demand is driving US expansion and rising US oil and gas production is cutting energy prices.
China’s domestic demand is decelerating, the lingering effect of its real estate crash. The US dollar is at a four-year high, while the euro is steadily weakening, the Japanese yen is at its lowest level in six years, the Russian ruble has fallen 20 percent since January, and the Brazilian real is at its lowest level against the dollar since 2008.
“The pendulum seems to have swung back from an environment in which (just five years ago) emerging markets were the darlings of the global economy,” Behravesh, said.
“While the locomotive role of the US is less powerful than it was a couple of decades ago … it has regained its role as a (and possible THE) major driver of global growth.”
Though strengthening domestic demand is propelling the US expansion, international trade is still a drag on the economy, a factor Behravesh notes which is helping economies in the rest of the world. The diverse nature of US imports has an impact on a large group of countries, developed and emerging alike.
Oil and gas production in the US has surged about 30 percent since 2010, spurring job growth, providing a competitive stimulus to manufacturing, an inflow of foreign investment, and a much smaller drag from trade.
Additionally, Behravesh added, there are also significant benefits to the rest of the world. Rising US production is a major force in stabilizing global energy markets, offsetting turmoil and disruptions caused by conflicts in Syria, Iraq, Libya, and between Russia and Ukraine.
“Increased domestic oil production in the US has also been a major factor in driving down the cost of petroleum – Brent crude has fallen from around $125 per barrel in early 2012 to around $92 in early October – providing an important boost to oil-consuming countries around the world,” Behravesh said.
Behravesh’s global economic outlook will kick off the IHS Global Economic and Country Risk Conference November 11-12 in Washington, DC IHS economists and industry analysts plus outside experts will discuss other aspects of the economic and global risk environment at the conference, focusing on the impact of ongoing instability and slow growth on different regions and markets around the globe.
The event will be held at the Marriott Marquis in conjunction with the IHS Pricing and Purchasing Summit. IHS experts will focus on costs and supply chains of key commodity sectors including steel, precious metals, chemicals, agriculture and labor.