Economic crises expose and exacerbate structural weaknesses. Analysis by The Economist of five decades of gdp data finds that growth rates in rich countries tend to converge during expansions, as even the weakest economies are pulled along. Yet during downturns performance diverges markedly. In the first half of the 2000s the average annual gap between the gdp growth rates of the best- and worst-performing rich countries was five percentage points. In 2008-12, in the recession that followed the global financial crisis, the gap widened to ten points.
This recession will be no different. Three factors should help separate the bad economic outcomes from the dire ones: a country’s industrial structure; the composition of its corporate sector; and the effectiveness of its fiscal stimulus. The Economist has used indicators of these to rank, roughly, the exposure of 33 rich countries to the downturn. Some, such as those in southern Europe, appear far more vulnerable than America and northern European countries (see chart).
Chosen excerpts by Job Market Monitor. Read the whole story @ Picking off the weak – How deep will downturns in rich countries be? | Finance and economics | The Economist
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