Introduction to Global Economy
The world continues to get smaller every day. By and large the economic condition of a particular country was largely impacted by the policies and situation within that country. However this is no longer the case as financial policies and situations in foreign countries can impact another country very strongly. So we’ll present an introduction to global economy so you can better understand its importance and impact.
A global or world economy generally refers to an economy which is based on the economic conditions and practices of all the world’s countries rather than just a specific country. It can also be viewed whereby local economies aggregate together to form an overall situation.
It is possible to measure different geographic economies through a common measure. For example for many years the US dollar was the standard measure of worth no matter what country we are referring to.
A global economy also refers to the activity made by people and it measures the output in monetary terms. And as said earlier there is a single monetary measure used for different regional or local economies in order to measure them on a consistent basis.
The standard of US dollars is a good way for consumers and business people worldwide to accurately measure the local economic output and impact. There are many local economies and several powerhouse economies. At this time the largest economies in the world are the United States, China, Japan, Germany, France and United Kingdom.
It has been interesting to note some key changes in global economy over the past five years. In 2006, the total economic output worldwide expanded by $3.9 trillion. Of this the USA accounted for one fifth of the total while China accounted for one ninth.
The following year the global markets expanded by $6.3 trillion and China accounted for one eighth of this total while the US only accounted for one tenth of the global output growth.
In 2008 as the credit crisis began to take hold, the total economic output worldwide expanded by $5.8 trillion. At this time China accounted for one sixth of this growth. However at the same time 11 countries shrunk by $267 billion over that time lead by the UK and South Korea.
Then in 2009 there was a global contraction of $4.1 trillion lead by the UK at 1/8 of the total followed by Russia at 1/10 of the total. At the same time the economic output of 50 countries expanded by $781 billion which included China and Japan.
As things move forward the global economic output is expected to expand by $4.6 trillion with China accounting for one sixth of the total and the US with one ninth. And a number of countries, particularly in Europe are expected to remain sluggish until 2011 or 2012.
A global economy is especially important to track and measure as goods produced in one country are shipped and sold in another. And as more and more corporations expand their international presence, the ability to track, measure and interprete economic data from different countries is an ever challenging and important consideration.