How the west was lost: Economic dominance ends in 2009

Western economies to constitute less than 50 per cent of global GDP this year for first time since 19th century

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Tuesday, 02, Jun 2009 04:16

The worldwide recession will this year end western dominance of the global economy, six years than earlier forecast, a new report has claimed.

The Centre for Economics and Business Research (CEBR) said the economies of the United States, Canada and Europe will constitute less than 50 per cent of global GDP this year for the first time in more than two centuries.

An end to western dominance had been predicted previously, but was not expected until 2015.

But CEBR said the credit crunch had accelerated the shift eastwards, which will also see China overtake Japan as the world's second largest economy.

Between 1995 and 2004 the economies of US, Canada and Europe constituted between 60 and 64 per cent of global GDP.

By the end of this year however they are expected to contribute just 49.4 per cent, with the figure set to drop to 45 per cent by 2012.

Douglas McWilliams, CEBR chief executive and one of the report's authors, said: "The recession has brought forward the time when the non-western economies produce more than half of world GDP, for the first time since the middle of the 19th century.

"We had expected this to happen, but not quite so soon. The west will have to start to get to grips with the fact that we are no longer dominant and cannot expect to have things our own way."

Co-author Jörg Radeke added: "One of the factors causing the shift in shares of world GDP is the fact that the Chinese economy has bounced back rapidly.

"This will have knock on effects on oil and commodity prices and is one reason why we are forecasting a price of oil of $80 a barrel in 2012."

Today's report also revealed that world GDP will drop by 1.4 per cent this year; the first overall fall since 1946.