In the mix of high-frequency economic data, it’s easy to lose track of how the economies of the world are actually doing in comparison to each other.
The following map contains such a comparison.
The map shows economic growth conditions by nation according to four classifications.
A green classification represents strong economic growth (i.e. expansion), while a blue classification represents moderately positive economic growth (i.e. recovery).
On the other side of the growth spectrum are economies contracting or at-risk of contracting. These economies are represented by two colors, orange or red. An orange classification means that businesses within the nation are at risk of falling into a recession, while a red indicates that business conditions are in recession territory.
The map ranks the following nations as having businesses growing quicker than most other nations: Canada, western South America and Central America (Argentina, Uruguay, Chile, Peru, Ecuador, Columbia, Panama, Costa Rica, Nicaragua, Guatemala, Dominican Republic), Australia, some southeastern Asian countries (Indonesia, Philippines, Vietnam), Turkey, and a couple of European countries (Poland, Norway).
On the other end of the growth spectrum are countries either in a recession or at-risk of entering a recession. Countries in a recession are solely on the European continent, including Italy, Greece, France, Spain, Portugal, Netherlands, Ireland, Denmark, Finland, and Croatia.
The list of countries with businesses not doing so well grows larger when including the nations with at-risk business conditions. The list includes most of the remaining European countries (Germany, Belgium, Czech Republic, Slovakia, Hungary, Sweden), the big Asian economies of Russia and India, and various other countries (South Africa, Venezuela, Mexico).
Finally, countries on the verge of recovering include the United States, Brazil, the United Kingdom, Austria, Switzerland, Lithuania, Latvia, Estonia, China, Thailand, Japan, South Korea, Singapore, and New Zealand).
Anything surprising?
One thing stands out. Businesses located in the world’s largest economies are generally in recovery territory. This is shown graphically in the following figure, with the size of the nation’s economy represented by the size of the bar and the color of the bar representing the general business conditions in the given country.
Interestingly, only four of the largest 20 economies are in expansion territory, while four are in recession territory and four are in at-risk territory.
The largest classification is recovery, comprising eight of the 20, including four of the top five.
Are these figures consistent with private equity conditions? Well, no, not really. Overall, the private equity industry is growing much quicker than most of the world’s economies, at least as measured by industry employment, deal volume, or number of deals. As is likely no surprise, the private equity industry is much more pro-cyclical than most other industries.
Overall, the global economy continues to grow in moderately positive growth territory, with most of the world’s largest economies hovering in recovery territory, being one-step above at-risk and one step below expansion.
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