The global economy is almost out of the economic woods after a brutal recession, according to a new report released Wednesday.
But, this time around, the resuscitation of many national economies will be anything but normal, said the study published by Scotiabank Economics.
China expected to gain in economic stature during recovery. (Eugene Hoshiko/Associated Press) "The road to recovery won’t take us back to the world that existed before the sub-prime crisis began.... World activity will be driven increasingly by China, India, Brazil and other emerging powerhouses," said Warren Jestin, the bank's senior economist and author of the global economic commentary.
Start the party
Canada and the United States are set to get on the path to economic growth once again, mainly because of the massive stimulus efforts by various government, including Washington and Ottawa but also China, the report said.
That Asian country spent $580 billion US to pump up demand and incomes in the Chinese economy, a move that recently led the World Bank to raise its growth forecast for China to almost eight per cent in 2009.
In the United States, Washington has pumped almost $800 billion into reviving the country's moribund capital markets sector.
This cash, along with what Europe, Canada and Japan have spent, has gone to good use, Jestin said.
"Enormous fiscal stimulus has put China at the vanguard of nations starting down the road to recovery, with the U.S. appearing to be in the pole position among major developed countries," he said.
As well, in Canada and the United States, the cratering car sector — plagued by excessive inventories and financing issues — is showing signs of life, Jestin said.
New kings of the castle
What is changing, however, is who will be on top of the economic heap during the recovery, the Scotiabank vice-president added.
China, India, Brazil and other developing economies will likely take the front position in terms of economic expansion as more industrialized areas, such as Europe, Japan and the United States, will enjoy modest growth in the coming years, Jestin said.
Using the forecasts of the International Monetary Fund, China, India and Brazil will post average gross domestic growth of 3.8 per cent in 2009 and 5.8 per cent in 2010.
By contrast, Canada, the United States and Germany will see their GDP contract, on average, by 3.7 per cent and expand by a meagre 0.6 per cent in the next 12 months.
As the recently developed economies grow faster, their demand conditions will dictate prices for Canadian commodities, such as oil, wheat and potash, Jestin said.
