World fiscal stimulus packages as a percentage of GDP in 2009.
Never before in world economic history, the majority of Developer countries have implemented expansionary fiscal policies at the same time as seen in 2008-2009. From United States to Australia, from Russia to South Africa, from Japan to Saudi Arabia or from Mexico to Chile, all governments have decided to increase public spending through massive investment plans and expenditure. These injections have been funded with the issuance of more and more debt.
But it’s key to analyze the economic impact of these incentive plans, based on the size of each economy. Look at the chart above and you will see how Saudi Arabia and China, with 16% and 12.1%, are the only one with more than 10% of their Gross Domestic Product (GDP).
In the United States it’s 5.6% of GDP and surprisingly, in United Kingdom is only 1.8%, when both countries have similar problems and imbalances.
Perhaps this explains the present year chinese economic performance, the only country that still has not entered into recession.
One thing is certain, we will see tax increases throughout the world in coming years.
«« read previous post: Correlation between oil prices and hurricane seasons in US | read next »»