Lots of economic numbers out there today. The most important for me being from the Chinese, Indian, and of course Canadian spheres.
First, Canada. The CBC is reporting the Bank of Canada’s new growth projection of 3.1% for 2006.. this is up from the projection in October.
The bank continues to judge that the Canadian economy is operating at its production capacity and will grow roughly in line with its production potential through 2007
Not much to say but “good” to that.
Of course, there are ups and downs.. in Canada, “downs” right now, are in the auto sector where the North American manufacturers continue to announce layoffs and plant closures. GM today announced it lost 8.6 Billion dollars in 2005. Luckily for Canadians, most of the layoffs are happening south of the border, and Toyota and other companies are picking up the slack
The “ups” are really really UP. And they mostly have to do with oil. Whether it’s Petro-Canada pumping out the profits… or Oil Sands Trust churning out the syncrude, continued historically high oil prices are nothing but good news for the Canadian oil industry.
But we should also not overlook the other resource industries.
Canada is a leading supplier of Copper, Zinc, Nickel and Lead
Canada is the third largest copper producer in the world, after Chile and the USA. It is also the world’s largest zinc and second largest nickel and lead producer.
So where is all that raw material going?
Well… it’s feeding the incredible economic appetites of both China and India as their economies continue to skyrocket.
China in particular is growing frantically, 9.9 percent in 2005. That places it ahead of the United Kingdom in 4th place of the largest economys in the world. (US, Japan and German being, 1-2-3) And it’s expected to continue growing at nearly that rate for the forseeable future.
“The whole economy is pretty healthy and strong,” said Zhu Min. “Domestic consumption really picked up and domestic construction is very strong.”
The insatiable demand of Chinese industries for base metals has helped drive up the price of commodities around the world. China is the world’s largest consumer of copper and zinc. Both metals hit record highs in Wednesday trading on the London Metals Exchange.
And they have a 5 year plan to continue growing as fast as they can… but they already see the related problems.
We are a populous country with little resources and a weak economic
foundation,” [Vice Premier Zeng Peiyan] continued. “In our vast country it will take years to build a decent life for our people.”
What else… CONSUME!
one of the most important shifts China signalled was something that many economists had already said would be necessary: the promotion of internal consumption to balance the country’s huge exports.
“We will rely on expanding the domestic market as there is huge untapped potential there,” the vice-premier said
As the Chinese ramp up their consume in order to “balance” their incredible industrial output will the world economy be able to keep up with the demand? I have my doubts. And what do they think about the environmental impacts of bringing 1.2 billion Chinese people into the age of consumption?
Well, they’re making semi-encouraging noises… but who knows what will really happen?
“We will build a stable, economical and clean energy system,” he
said. “Our use of coal will be clean and by 2020 we plan to have 15
per cent of our energy needs met by renewable methods, including
biomass and wind energy.”
And that of course leaves on the OTHER behemoth in the world economy, India.
The Indian economy grew by an equally impressive 7.5-8 percent last year and continues to show signs of emerging as a Global power right along with it’s Asian neighbour.
[Vice-Chairman and Managing Director of
Mahindra & Mahindra, Anand G. Mahindra] also challenged the common belief that in future “China will do the hardware and India will do the software,” prompted by the massive growth of the software industry in India.
“India will do both,” he said.
However, all of the panel members agreed that there would be more convergence than competition between China and India.
I would agree with that as well. And that “convergence” will also be in the form of military, diplomatic and energy policy. India and China are both looking to Iran to help sustain and feed their growing thirst for oil and natural gas. Will this cause India to drift away from the European and US sphere of influence? We’ll see.
Change is happening in our world. All of the things that I blog about on Murkyview are all related… from peak oil, to the Iraq war, to Middle East tensions, to the rise of South Asia, to the rise of South American leftists. It’s all related, and to say otherwise is to deny the incredibly complex world we live in.