Global economic outlook 'better than we think'

Amidst all the doom and gloom predictions of low growth and fears of yet another global economic meltdown, the world is doing far better than most think, says Jim O’ Neill, chairman of the Cities Growth Commission in the UK. Speaking at the Mining Indaba in Cape Town last week, he said the world had faced two huge global upheavals during the last decade and these had affected global GDP. “Estimates are that the world economy will grow around 4.1% between 2011 and 2020. This may not sound all that impressive but if we look at world GDP from 1981 to 1990 then we see it was only 3.3%. It remained around this mark until 2000 before increasing slightly to around 3.7% between 2001 and 2010,” he said. O’Neill added that while the global economy was not necessarily performing at its best and could definitely improve, these figures however showed that the situation was not as dire as was often being made out to be the case. Commenting on commodity prices, he said mining houses were best advised to “assume that the following year commodity prices will be lower than they are in the year we are in” and should plan accordingly. He said in this regard it was important to take note of the changes in China as the Asian giant continued to dominate the market, controlling supply and demand. “China is undergoing a metamorphosis and it is advisable to keep a close watch on what they are doing if you are in the commodities business,” he said. He said the country was moving away from its quantity approach and fast starting to embrace the concept of quality and sustainability of its domestic growth rates.