Doubts about the extent of the “global downturn”

Doubts about the'global downturn'

Graphic: NOAA

The continuing rise in CO2 levels measured at Mauna Loa contradicts the economic

There is now widespread agreement that the current economic crisis is the most severe slump since the "Great Depression" of the 1930s. Thus, the U.S. octogenarians Barry Eichengreen and Kevin H. O’Rourke (hereafter referred to as "ER" for short) on the 6. June put online a comprehensive global comparison of macro-economic data, according to which the current slump in global industrial production has so far been as severe as it was during the first phase of the "Great Depression.

Doubts about the'global downturn'

Graphic: Eichengreen/O’Rourke 2009

World trade seems to have declined even more sharply than then, while in practically all the other categories and countries investigated by ER the corresponding declines were at least as severe as in the 1930s, for example industrial production in the U.S. and Germany. In some industrialized countries, such as Italy, France or Japan, industrial production has recently been allowed to collapse even more severely than during the "Great Depression".

Doubts about the ausmab of the'global downturn'

Graphic: Eichengreen/O’Rourke 2009

In the meantime, stock prices have recovered somewhat from their lows, and world trade and goods production have stabilized at a low level, according to statistics. However, according to ER, this has been done to a much lesser extent than in the first phases of the "Great Depression".

While economists around the world are now puzzling over the extent of the actual slump in global GDP and how it might continue, there is no doubt that this slump has been almost simultaneous worldwide, and in any case far more severe than in any economic crisis since the Second World War. World War. For example, the OECD now expects global economic output to fall by 2.2 percent in 2009, compared with a decline of 2.75 percent in March. But already in the coming year, mainly thanks to the economic stimulus programs launched worldwide, a positive growth rate of 2.3 percent should be achieved again, according to the OECD experts.

However drastic the decline in global production may have been, a reliable indicator of the global economy has so far shown no reaction: the atmospheric carbon dioxide concentration measured in Mauna Loa, Hawaii. As the seasonally adjusted data show, this value responds very directly to the industrial cycle, so that all economic crises that have occurred since this value was collected have been reflected very directly and almost immediately in the measured carbon dioxide concentration.

After all, both the Asian crisis of 1997 and the economic slump following the New Economy boom at the beginning of this decade immediately left their mark on these statistics. This indicator also has the advantage of not being based on the aggregated data sets of local statistical authorities, but apparently reflects the officially measured global output with a surprisingly short delay.

Of course, atmospheric conditions and the varying energy demand per statistical unit of output of the world production inevitably cause fuzziness, but such often contradictory deviations all had to go in the same direction and far exceed the previously observed cause-effect relationships in order to reconcile the respective results.

doubts about the ausmab of the'global downturn'

Graph: NOAA

In any case, the chart of Mauna Loa shows with every economic slump of the last 50 years already with the naked eye a flattening of the C02 dynamics, which is obviously not the case this time.

Although there is currently no conclusive explanation for this, it can be amed that this could be linked to a real increase in production in major emerging economies such as China, Brazil and India, which are home to particularly C02-intensive production, but the slump could also have been less severe than generally amed.