ROBERT SIEGEL, HOST:
For the U.S. economy, 2015 was a pretty good year. Growth was solid, if not robust. Unemployment fell to 5 percent. But much of the rest of the world has been struggling with slow growth and falling commodity prices. Here's NPR's Jim Zarroli with the year-end look at the global economy.
JIM ZARROLI, BYLINE: A few years ago, when the advanced economies of Europe and the U.S. were struggling, the so-called emerging markets appeared to be on the rise. Countries such as Venezuela and South Africa were in enviable shape, but by 2015, the good times had come to a crashing halt in many places. Ken Rogoff is an economist at Harvard.
KEN ROGOFF: And the ones which were particularly badly governed - Brazil, Russia - they're facing possibilities of crisis in 2016. In fact, it's almost a miracle it didn't happen in 2015.
ZARROLI: What the emerging market countries share is that they are, for the most part, commodity economies. They depend heavily on oil and mining and agriculture, and there's been a sharp reversal in commodity prices this year. It's also affected more advanced economies such as Canada and Australia. Eswar Prasad, professor of trade policy at Cornell, says what's hurt prices so much is the slowdown in China.
ESWAR PRASAD: For many commodity-exporting countries, in particular, the China slowdown is just one additional turn of the screw that makes it even more difficult for these economies to get back on track.
ZARROLI: For years, China was building office towers and roads and factories at astonishing rates, and it couldn't get enough oil and steal and copper. Now its growth rate has dropped. The troubles were underscored this summer when China suddenly devalued its currency, making news around the world.
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UNIDENTIFIED MAN: Stock markets in China are this morning way down again. The declines followed Monday's free fall in the Shanghai Stock Exchange. That...
ZARROLI: China has been doing what it can to keep its growth rate from dropping much further. This year it even modified its hated one-child policy, in part for economic reasons. But China's troubles reveal an uncomfortable fact. The world has more factories and mines and ports than it's using right now, and Prasad says that's driving down commodity prices.
PRASAD: The fact you don't have strong demand, plus the fact that there is a lot of this supply coming onto the world markets does put downward pressure on prices.
ZARROLI: And commodity-producing countries have responded in some cases by ramping up production, which has only driven prices down further. Earlier this month, OPEC officials met in Vienna to discuss falling prices. Secretary General Abdalla El-Badri told reporters that the days of $100-a-barrel oil were over.
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ABDALLA EL-BADRI: We have to accommodate ourselves, our people, our country to the new reality that the market will not realize $100 oil anymore.
ZARROLI: The meeting ended without any agreement, and since then, oil has fallen well below $40 a barrel. IHS chief economist Nariman Behravesh says prices won't keep falling forever.
NARIMAN BEHRAVESH: Eventually, it sort of turns itself around. That's the way markets tend to work. Production will slow. There's no question. For example, oil production in the U.S. has already started to slow, and we'll see more of that, but it can take a while.
ZARROLI: As economies such as Russia and Brazil have stumbled, they've attracted less investment money, and a lot of that money has been flowing into safer places, such as the United States. It's one reason that the dollar has been gaining strength against other currencies. The stronger dollar is a problem for American companies that export a lot. It makes them less competitive. But falling oil prices have been great for U.S. consumers. Harvard's Ken Rogoff says consumer spending is pretty vigorous right now.
ROGOFF: So the U.S. has very, very solid domestic demand. And the rest of the world's holding us back a little bit, but it's not enough to put the economy in reverse course. It's still moving forward.
ZARROLI: Rogoff says the big question in 2016 remains China. It's still trying to redirect its economy so that it's driven more by consumer spending and not just building bridges and factories. And China is now so big and powerful that whatever it does, the impact will be felt around the world. Jim Zarroli, NPR News, New York.
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