Slowdown Underway: Global Economy Has Peaked

With both developed and developing nations in economic slowdowns, the global economy appears to passed a cyclical peak, claims the Manufacturers Alliance, an Arlington, Va.-based business and public policy research group.

For industrialized nations not including the U.S., the economic growth rate will likely slow from a 2.4% annual rate in the final quarter of 2005 to 2.3% during the first three calendar quarters of this year. The growth rate for these industrialized countries is then expected to increase to a rate of 2.4% in the final quarter of 2006 and to a 2.5% rate during the first half of 2007, says alliance economist Cliff Waldman.

Among developing nations, including China and India, the growth is expected to fall from a 4.3% rate in the last quarter of 2005 to a 3.9% rate for the just-ending first quarter of 2006. The growth rate for developing countries is expected to pick up to 4.2% in the second quarter and 4.5% in the third quarter. "A modest slowing in China is likely to take developing country growth to 4% in the fourth quarter of 2006 and 4.2% in the first half of 2007," says Waldman. "Growth is then projected to rebound to 4.5% in the second half of 2007 as the Chinese economy recovers," he adds.

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