Interesting new research from Prof Nouriel Roubini provides some perspective on relative levels of consumer spending around the world:
• US private consumption accounted for 16% of total global output in 2008
• It was valued at $10trn, just ahead of European consumption at $9trn
• Total Asian consumption was under $5trn
• China’s consumption was $1.6trn, about equal to the UK
• India’s consumption was 56% of its GDP, China’s was only 38%
These numbers highlight the fact that Asian economies have been over-focused on supplying exports to the West, rather than domestic needs.
This means, as Deutsche Bank’s Markus Jaeger notes, that Asian domestic demand can “only partly offset the likely permanent reduction in foreign demand“. And Jaeger adds that even fast Asian domestic growth can provide “little support for G7 and global demand“.