The global economy has been a rollercoaster of ups and downs, some regions discovering more peaks than valleys, and others crawling laboriously uphill. This blog post will delve into the economic situations of several key players on the global stage, such as Europe, America, Asia, and the Middle East. With the use of past data and current trends, we also attempt some predictions for the future.
From 1980 to 2020: A Tale of Rapid Changes
From 1980, the Middle East saw decreases, with areas like Lebanon, Iran, and Tunisia witnessing massive slump when looking at GDP per capita. That is due to the sanctions and geographical unrest partially because of the US and western involvement, partially from their colonial history. At the same time, East Europe and East Asia grew rapidly. South Korea and Taiwan boomed between 1980 to 2000, showing a significant spike in rankings from 60th to 30th. While China and Eastern Europe saw massive growth from 2000-2020.
The period of 1980 to 1990 was tough for Argentina as they fell dramatically, from a ranking of 26th to a spot as low as 46th. Ever since, it's continued to decline to the place of 65th in 2023, all while still experiencing economic catastrophe.
This stark decline leads to the question of whether Western countries could potentially experience a similar downturn in the coming decade, where France sits at 23rd, Italy sits at 26th, and Spain at 36th. The massive declien in nominal GDP per capita is always caused by rapid depreciation of the currency, which in this case Euro.
The Japanese Economic Situation
The highlight for Japanese economy was between 1990-2010, when Japanese salaries skyrocketed due to the forceful sudden currency appreciation from Plaza Accord in 1987, surpassing US/France. Although this was short-lived as the US salary surpassed that of Japan in 1997 and French in 2004, 10 years was enough time for the Japanese companies to move the operation outside or lose the international competition against other countries, which made them face deindustrialization followed by a long depression from 2000-2020.
The Lost 30 Years Myth and Japanese Pose-2000s Industrialization
Contrary to popular belief, the “lost 30 years” claim for Japan is a misrepresentation.
The complaint about the Japanese salary not changing in the last 30 years is precisely for this reason. The anchor point of 1990 was simply way too high in the international standard even though it appears the same at nominal value.
That led Japanese to buy many foreign assets and led people enjoy international travel, but lost competitiveness in the domestic industry and export market.
EU and US Nominal Salaries and Debt Contraction
The issue with the EU and the US is the high nominal salaries due to their currencies as international reserve currency. Both regions seem to be raising salaries without robust industrial strength, relying heavily on borrowing and printing money. Printing money will raise inflation and offset the real living standard domestically, they can still enjoy the cheap import from other countries at nominal trading because their currencies won't depreciate.
Predictions for Future Economies
Predictions for the future are that pounds/USD would see the first wave of devaluation somewhere between 2025-2030. It seems unlikely that Euro will suffer depreciations until other economic blocks become more competitive as they still represent a fair share of global trade, like India or the ASEAN region predicted to in 2030s.
For Europe, political instability stemming from Italy and Spain might prove problematic, followed by France. China, on the other hand, is set to disrupt Europe’s planes, EV, and pharmaceutical industries up until 2035 as they prepare to climb higher in the ECI rankings to the even ground from the curernt 25th to an estimated 10th position (the same position as where US is today, as announced by the government's technological ambition).
In conclusion, the global economy is a fluctuating entity, influenced by a myriad of factors. Yet, as we analyze trends, we can better understand economic conditions and predict future outcomes.