This week, the Organization for Economic Co-operation and Development (OECD) released a new forecast of the global growth for the next two years. The good news is that emerging markets might pick up slightly, but nothing to the levels seen before the global recession. The bad news is that the problems in the Eurozone area are here to stay, at least for the immediate future. As OECD Secretary-General Angel Gurria put it, “The world economy is far from being out of the woods.”
But what happened this year?
The slowing of the global recovery continued in both developed and developing countries in 2012. As our new Global MetroMonitor, a study of economic growth in the world’s 300 largest metropolitan economies, shows, growth rates decelerated last year for about half of these large metro areas. Ongoing problems in the Eurozone led an increased number of metro areas into at least a partial recession, not only in Eurozone countries but also in the United Kingdom and in Eastern Europe .The slowdown in the global economy also reduced growth rates in developing Asia-Pacific metro areas, though they are still growing faster than other metro areas around the world.
But the news is not bad all around.
The 300 largest metro economies worldwide accounted for nearly one-half of the global economy, but for more than one half of the global economic growth between 2011 and 2012. And these 300 metro areas concentrate only 19 percent of the world population.
Beneath the grim global and national outlooks, we see pockets of growth at the metropolitan level. Fifty-six metro economies did better than their countries in 2012 on both of the indicators used in our study. Further, they are not concentrated in any one country or one world region; they are spread around the world, from 12 in developing Asia-Pacific to five in the Middle East and Africa. North America had seven, two fewer than Western Europe.
In terms of recovery, almost three-quarters of the 300 metro areas had higher levels of employment and/or GDP per capita in 2012 than in 2007. Most of the metro areas in developing Asia-Pacific and Latin America had no recession or had fully recovered to their pre-recession peaks.
Which brings us to the U.S. fiscal cliff.
The U.S. recovery remains fragile, with only three U.S. metro areas (Dallas, Knoxville, and Pittsburgh) having recovered to their pre-recession peaks. North American metro areas represented almost two-thirds of the largest metro economies still below 2007 levels of both GDP per capita and employment. If upcoming debates over the fiscal cliff and long-term solvency derail their progress, it could severely threaten not only the American economy but also the broader global recovery.