Wednesday, September 01, 2004

The Anglosphere has been the consumption engine of the global economy since 1997. While the US is obviously the 800-lb. gorilla in the group, we shouldn't forget that the UK, Australia, Canada and even little New Zealand are doing their share binging for global GDP growth. But now it looks like all the bingers are either going to have to cut back or run up increasingly massive current account deficits, because even the Anglosphere is slowing markedly.
Australia�s economy grew by a less than expected 0.6 percent in the second quarter as the farm sector proved unexpectedly weak, but with upwards revisions to previous data, economists still saw a post-election rate hike as on the cards.

Second-quarter gross domestic product rose a seasonally adjusted 0.6 percent in data released on Wednesday, to be up 4.1 percent from a year earlier, after revised 0.5 percent growth in the first quarter and a 1.3 percent expansion in the fourth quarter of 2003.

Forecasts had centred on a 0.9 percent increase. �Although you had some shock with the headline figure being below expectations, I don�t think this alters the prognosis for rates,� said Anthony Thompson, senior economist at HSBC.
For 2004:II, we have annualized GDP growth rates in the Anglosphere of: Australia, 2.4%; US, 2.8%; UK, 3.6%; Canada, 4.3%. Canada has been chugging along nicely now for three quarters, and the UK for five, so why worry? Because these important parts of the consuming Anglosphere are less and less playing their global consumer role.

The UK is primarly a consumer for the EU, racking up a �6.2 billion deficit with the European Union in the first quarter. It used to help keep the rest of the world afloat as well, running a �5.3 billion deficit with the non-EU countries in 2002, but since then its non-EU deficits have been getting smaller and smaller. The UK even ran a notable non-EU current account surplus in 2004:I. It helps that the US trade deficit with the UK is a whopping 42% larger in 2004 than this time last year.

Canada is falling down on the overconsumption job as well. In 2004:II it ran a big fat current account surplus of 3.3% of GDP, and at C$10.4 billion the second highest surplus on record. So far in 2004 the US trade deficit with Canada has swelled 34% over 2003.

It looks like even high-flying Canada and Britain are becoming merely carbon copies of the rest of the world, increasingly dependent on US demand to fuel their growth.


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