Economic Growth

Written by: Elena Ramlow 

As 2014 begins the key economic debate relates to the predicted stability and success of the economy. Economists look to past years—especially 2013—in an attempt to determine how the economic will change over the course of the next year; they have agreed that economic growth is a justifiable expectation for 2014.

            Economists make these predictions through the calculated GDP, Gross Domestic Product, which is the dollar value of all final goods and services produced in the given country. The GDP has been agreed upon to set the standard for economic growth and as it increases that is when growth is occurring. A good GDP is anywhere between 3 and 4% and “global growth is now projected to be slightly higher in 2014, at around 3.7 percent”. (1) This global growth is calculated through the GDPs of all countries and is representative as each separate economy as a whole. An increase in the global GDP was primarily caused by “global activity and world trade [picking] up in the second half of 2013” (1). The economists contributing to this source have made an educated prediction based on past GDP growth and predicted trends. The countries with stable economies that contribute the greatest to the global economy are most commonly leader countries as they have had the longest period of time to solidify and sustain growth. However, other countries known as follower countries can still have influential benefits on the global economy, it is only more difficult.

            The U.S. is known as a leader country and the global growth can be applied to the US as balance of trade is a key factory our own GDP was 3.2% in the fourth quarter for 2013 making them comparable. The recent government spending debacle as they reached their ceiling is a cause for speculation as to whether or not the GDP will actually grow especially from the expenditure approach standpoint. Therefore economists believe “the pickup in 2014 will be carried by final domestic demand, supported in part by a reduction in the fiscal drag as a result of the recent budget agreement” (1) signifying the solution to the ceiling dilemma is a means of future economic growth. Therefore there is evidence to support growth in the coming year.

            However, the predictions these economists have made are misleading. They are not describing true economic growth, but short term fluctuations. If they were truly describing economic growth evidence of a permanent change would have to be evident which it is not. These short term fluctuates are often caused by shocks most commonly in demand.  Viewed through true economic perspective all aspects must be considered, not just fluctuate in the short run.  Therefore economic growth is not as concrete as some sources lead the viewer to believe. In reality, “the world’s major economies still face many structural flaws and policy constraints that hinder more investment and faster productivity growth, making the medium-term outlook for a significantly faster path of global growth more uncertain”. (2) This trusted economic source points out the flaws in such an argument and reminds that economic growth and the fact that it is not definite over a short period of time; rather increasing GDP must be sustained for a long period of time to determine true modern economic growth.

"IMF World Economic Outlook (WEO) Update: Is the Tide Rising?, January 2014." IMF World Economic Outlook (WEO) Update: Is the Tide Rising?, January 2014. N.p., n.d. Web. 10 Feb. 2014. <http://www.imf.org/external/pubs/ft/weo/2014/update/01/>.

"The Conference Board." Global Economic Outlook. N.p., n.d. Web. 10 Feb. 2014. <https://www.conference-board.org/data/globaloutlook.cfm>.