By this time there is no doubt that the whole world is going through a change in terms of economic cycle. These last few days financial markets are reflecting the general uneasiness with the situation and the uncertainties regarding the future, while oil and food prices continue to increase. We could spend a lot of time discussing to what extent the problems are on the demand or on the supply side, although it seems fairly obvious that both sides are being affected, and therefore we are seeing a complicated environment of low growth and high inflation, which makes economic policy decisions more difficult than in traditional “demand side” crises.

But we may ask ourselves to what extent growth in emerging countries is being affected. Although we economists are well known for being great historians, i.e., we are very good at explaining what has happened after the event, we are not as adept at predicting the future. Hence, all of our forecasts are subject to significant errors, and even more so when we live in a context of high uncertainty that can change the underlying conditions fairly fast. But even though we know these limitations let’s look at what the experts are predicting will happen with growth in different parts of the world for this year and the next. And we will use the forecasts provided by the magazine The Economist, that has a fairly good record overall in terms of forecasts.

Based on current information The Economist is forecasting that the United States will grow at 1.4% in 2008 and at 1.3% in 2009. Until recently the magazine was expecting higher growth in 2009 than in 2008, which was a sign of the expectation that economic policies in the US would start having a marked effect by the beginning of the following year. This new forecast goes in line with that of most other regions and countries in the world, where growth in 2009 is expected to be slower than in 2008. Exactly the same growth rates are expected in Japan for both years, while Britain is expected to grow at 1.6% in 2008 and 1.2% in 2009.

The euro area growth rates are estimated to be 1.7% and 1.3% respectively, and for the moment The Economist does not expect any country to show negative growth rates for the whole year. However, this may change. The latest data has confirmed that Denmark is already in a recession, and there are other countries that are showing very weak growth, putting them on risk of a recession, such as Ireland, Italy or Spain. But when we look at the largest emerging countries we still continue to see bright spots. China is expected to slow down from growth rates of above 10% to 9.8% in 2008 and 9% in 2009. If true, this is not a bad result. But China is not alone. India is expected to grow at 7.7 and 7.1 respectively, Russia at 7.2 and 6.4, and Brazil at 4.6 and 3.6% in each of the following years.

In Asia, Indonesia, Malaysia, Singapore, South Korea, Taiwan and Thailand are all expected to grow at rates of above 4% in both years and as high as 6% in some cases, and the same is true for countries in other regions of the world such as the Czech Republic or Poland in Eastern Europe, Argentina and Colombia in Latin America, Turkey, Egypt and South Africa. Among emerging countries there are a few that are expected to grow somewhat more slowly, such as Hungary (between 2 and 3.5%) or Mexico (at approximately 2.5%), but they are clearly the exception to the rule.

So if we look at the numbers worldwide at this time there is almost no possibility of the whole world falling into a recession. In fact most forecasts are indicating a relatively healthy growth rate of close to 4% for the whole world, but there is no doubt that a significant part of this growth will be coming from emerging countries. This is just another sign of how the world is changing in terms of the relative weights of different countries and regions. And this is a trend that started many years ago and will most likely continue in the future.