ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
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And I'm Melissa Block.
Here's one lesson from the G-8 Summit in Italy: the big industrialized countries are not going to be dictating terms to the developing world. In global climate negotiations, the rich countries haven't been able to get the developing countries to accept strict limits on greenhouse gas emissions. In part, that's because the developed countries have debt burdens and bleak prospects, while China, India, even Brazil, are now the rising stars of the global economy.
NPR's Tom Gjelten reports.
TOM GJELTEN: Every few months, the International Monetary Fund issues its outlook for the global economy. Basically, IMF economists revise their last outlook based on what's happened in the meantime. The latest update came yesterday. Here's Olivier Blanchard, the Fund's chief economist, highlighting one change.
Mr. OLIVIER BLANCHARD (Economic Counselor and Director of Research, International Monetary Fund): We have revised our forecast for Europe down a little bit.
GJELTEN: Down a little bit. So, the outlook for Europe is worse than it was last time. As for the other side of the globe…
Mr. BLANCHARD: Asia is now set for a stronger performance than we had anticipated earlier.
GJELTEN: Asia up. Economic differences between the regions are widening, and the IMF projections are consistent with others. The Organisation for Economic Co-operation and Development, or OECD, last month predicted that while the U.S. and European economies will decline this year and barely grow next year, China, India and Brazil are set to rebound strongly.
For years, there's been a debate about whether developing countries have, in economist jargon, decoupled from the developed countries, whether their fortunes are now independent of what happens in the developed world. Last fall, when everyone plunged simultaneously into recession, it looked like decoupling was a myth. But the latest data have revived the idea.
Fred Bergsten directs the Peterson Institute for International Economics.
Dr. FRED BERGSTEN (director, Peterson Institute for International Economics): China and India have already shown a sharp pickup in growth in the second quarter of this year. The U.S. will probably start growing now in the second half, Europe not until some time well into next year. You might say we've got a double decoupling: the emerging markets are leading, the U.S. will be in the middle, Europe will be pulling up the rear.
GJELTEN: If the emerging market countries have decoupled from the developed countries, it means they have more clout. The OECD secretary general last month likened the developing countries to a locomotive that'll soon be pulling the train of the world economy.
Still, there are doubters. David Gordon, director of Global Research for the Eurasia Group, is not that impressed by the high growth rates in the developing countries.
Mr. DAVID GORDON (Director, Global Research, Eurasia Group): I'm still very, very skeptical that you will have anything like the developing world leading the rest of the world out of the crisis. It will make things easier for the rest of the world, but I think the notion that these other countries have effectively decoupled is, in essence, wrong.
GJELTEN: Wrong because in his view, rapid economic growth in countries like China and India still depend on what's happening in the global economy as a whole. The Chinese economy, for example, still depends on exports, meaning, it needs the United States and other countries to keep buying Chinese products.
Mr. GORDON: I actually don't believe that the recovery will be fully sustainable in China in the absence of a more global recovery.
GJELTEN: Financier George Soros, on the other hand, gives the Chinese more credit. He's just back from a trip to Beijing, and he thinks the Chinese are gradually reorienting their economy away from the export sector. Here's what he said in an interview yesterday on Bloomberg Radio.
Mr. GEORGE SOROS: They can stimulate their economy. They have got reserves. If the stimulus is not enough, they can apply more. So, they will actually be the motor - one of the motors of the world economy, going forward.
GJELTEN: The key words there may be going forward. Soros is looking ahead. Up until now, he points out the main player in the global economy has been the U.S. consumer. Soros thinks the Chinese economy is now in position to replace the U.S. consumer as the driving force. He does acknowledge the U.S. consumer economy is three times the size of the Chinese economy, meaning, a Chinese locomotive would pull the train more slowly.
Mr. SOROS: Nevertheless, the Chinese, in my opinion, are going to gain in power and influence in a way that people (unintelligible) recognize.
GJELTEN: If that's true, the leaders of the G-8 countries will find they have even less clout when they gather for their next summit a year from now.
Tom Gjelten, NPR News, Washington.
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