A long-term slide in growth for industrialised nations

Over the long term,the US economy has been growing at its slowest rate since the Great Depression.

Written by New York Times | New York | Published: February 4, 2012 1:20 am

Over the long term,the US economy has been growing at its slowest rate since the Great Depression. Most other major developed countries have also experienced unusually slow growth over the last 10 years. The American economy’s reported 2.8 per cent growth in the fourth quarter,at an annual rate,was seen as mildly encouraging. But it meant that over the previous 10 years,the economy had grown at a compound annual rate of just 1.7 per cent. Until the current cycle,there had been no similar prolonged period of such slow growth since the Depression.

The IMF’s latest forecasts indicate that there is not likely to be a pickup in growth anytime soon,either in the US or other large industrialised countries. If the fund’s forecasts of 1.8 per cent real growth in 2012 and 2.2 per cent in 2013 prove to be accurate,the 10-year American rate at the end of 2013 will have fallen to 1.5 per cent,lower than any figure shown on the chart. But it will still be a little above the 0.9 per cent compound growth rate in the decade from 1929,the year the Depression began,to 1939.

The charts show 10-year growth rates in the six other countries that used to make up the Group of 7 industrialised nations that would hold regular international summit meetings. Comparable data is available for all the countries only back to 1981,so the charts begin with the decade that ended in 1991.

If the IMF forecasts are accurate,France,Italy and Britain will end 2013 with 10-year growth rates below any shown on the charts. Canada will hit a new low in 2012 before rising a bit in 2013. Its forecast 10-year growth rate of 1.8 per cent would have seemed very low a few years ago. For Britain,which endured a horrible decade in the 1970s that led to talk of the “British disease,” the previous postwar low,not shown in the charts,was in the 10 years ending in the second quarter of 1983,an annual rate of 0.95 per cent. The figure for the 10 years through 2011 is 1.4 per cent,but the IMF predictions indicate the 2013 figure will fall to just 0.94 per cent. The fund expects the British economy to grow by just 0.6 per cent this year and by 2 per cent in 2013.

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