Econ Assignment - Essay Example

This article states example of China, India etc where the local demand has grown steadily and to a vast amount-as pointed out by a global strategist ;Andrew Milligan, who believes that these changes may be sufficient enough to outset the negative repercussions of the US economy. Some economies are recovering on the belief pointed above. China is being touted as the next Dynamo while the emerging economies are being heavily focused on as being the next to replace the US. They hold a quarter of the world’s GDP-same as the US.

However, despite all the positive notes going around-there is still skepticism over whether the US can be actually replaced by these economies. Another important thing that has to be noted is the credit crunch-the recent downfall in the global economy has been due to the credit tightening activities which are not in sync with the infrastructure development and demand for energy and commodities-cause of the emerging markets success. If one was to analyze the global scenario, it could be seen that there are two economies which are primarily responsible for either producing or consuming most of the world’s products and services.

One is the Asian giant; China and the other is the eternal giant; the United States of America. However, both show a very different picture as while one has been amassing increasingly large sized account deficits, the other has been increasing its expenditures in order to increase its current account surpluses. In the present times, it can be seen that the US economy has suffered intensely due to its collapsing stock markets, decreasing consumer demand, falling housing sector, auto sector, and decreasing durable goods consumption which all resulted in one of the worse recessions which the US economy has ever suffered.

This time the usual economy savers are also not in a position