April 13, 2024
World Economy

As global war intensifies, world economy moving to slump

In this Friday, Dec. 7, 2018 photo, large-sized liquefied natural gas (LNG) carriers are being constructed at the Daewoo Shipbuilding and Marine Engineering facility in Geoje Island, South Korea. [AP Photo/Ahn Young-joon]

As the world is increasingly afflicted by war—the result of the ever-expanding front lines of US imperialism’s drive to maintain its position of global dominance—there are clear indications of a gathering economic slump.

This development will intensify the geopolitical tensions, leading to increased militarism, as capitalist governments worldwide increase their arms spending, while intensifying the attacks on the working class in order to pay for it.

The worsening global economic outlook was highlighted last week by data which showed that both the UK and Japan experienced two consecutive quarters of negative growth in the second half of 2023.

This trend was underscored by the decision of the European Commission to downgrade its forecast for European Union economic growth this year after 11 of the 27 EU countries were hit by recession in 2023, the most significant being the contraction of 0.3 percent in the German economy for the year.

The contraction in the Japanese economy—a 0.3 percent fall in output in the last quarter after a shrinkage of 3.3 percent in the third—came as something of a shock, because the “consensus” forecast among economists was, instead, for an expansion of 1.1 percent.

The UK data showed that the economy contracted by 0.3 percent in the final quarter, following a 0.1 percent contraction in the third. But underneath these relatively small numbers, at least at this stage, there is a deeper trend at work.

Considering the growth of the UK population, output per head fell by 0.7 percent in 2023, and has fallen in every quarter after failing to grow since the start of 2022. Excluding the effects of COVID in 2020, the UK has experienced the first contraction in per capita output since the global financial crisis of 2008-2009. Output per head is still 1.5 percent below the pre-pandemic level in the last quarter of 2019.

Since the financial crisis of 2008, world economic growth has been sustained to a considerable extent by the expansion of the Chinese economy. Not any longer.

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