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Recessions hit Europe, Asia and beyond

Mar 5


The European Union barely avoided sliding into an official recession at the close of 2023. The U.K. is in recession, while Germany has admitted to “recessionary conditions.” Portugal and Spain, meanwhile, led EU economic growth with growth rates of less than 1%.

Straight Arrow News contributor Peter Zeihan observes that this recession seems to be global and that it is certainly not limited to Europe. In fact, Zeihan argues, North America appears to be the only continent where economic forecasts continue to look good.

Below is an excerpt from Peter’s March 5 “Zeihan on Geopolitics” newsletter:

I was scanning the financial news this morning and realized Germany was in recession. In my morning brief I was informed Japan was in recession as well. On a call with a client someone brought up that the United Kingdom had joined the downers club. A quick convo with the staff revealed the same was true for Hungary and Ireland. And Greece and Lithuania and Estonia and Finland. Israel probably as well, while Australia, New Zealand, France, Spain and Italy are only a rounding error away. China’s data, such that it is, suggests that the Middle Kingdom is by most definitions at best recession-adjacent.

We’ve known for a while that between China’s stumbles and global demographic aging that consumption-led growth on a global scale has become nearly impossible. The problem is we have lacked the data to confirm what theory dictates. GDP growth data always comes out with a lag of months. Often multiple quarters for many places. And COVID (~&@#^*-ing COVID) scrambled everyone’s data for nearly three years. Well, we’re starting to get a good deep look at reality again, and it appears we may already be past the point where the sort of economic activity we’ve all thought of as “normal” for so long is simply…over.

Hey everybody, Peter Zeihan here coming to you from the coast above Carmel, California. I was going through my sweeps this morning, checking out the news, and I realized that the United Kingdom was in recession. And then I got another piece, Japan’s in recession. Another piece, Germany’s in recession, another piece, China to the degree that we have data that is either in recession or very close. And we kept looking. And you know, Israel and the Netherlands and most of Scandinavia and Western Europe, everybody is pretty much going slow. And even the economies that are still having growth in places like India are really slow, then Australia and New Zealand are probably within spitting distance. And it’s really just North America that’s doing fairly well economically at the moment.


So I think it’s worth explaining why we’ve got two big things going on. The first is that the China post-COVID bump never happened. And as we get more and better data out of China and demographics, it looks like they had a population collapse. That isn’t recent, we now know that the American preferred has been higher than than the Chinese birth rate since the mid 90s, suggesting it’s not that the Chinese are in and out of children, but they’re now running out of working age adults. In addition, new data has come out in just the last few weeks indicates that there’s been a huge shortage of kids showing up for kindergarten, indicating that started five years ago, people just stop feeding board anyway, yet all that together. And it means that the Chinese are ended up people under age 50. So, the possibility of them having any sort of consumption driven activity is nil. Now if you’re a country like Australia, or New Zealand, or Indonesia, or Saudi Arabia that exports raw materials to the Chinese, that’s obviously a huge problem. As for the Europeans and the Japanese, it’s a different sort of problem, although wrapped into that, because of course, exporting to China is a big business for a lot of people. Here, it’s also demographic, but much further along.


On average, half of the world’s baby boomers have already retired countries like Italy hit this a little bit earlier, Germany is in the process of heating right now. Korea is about to hit it as well.


Spain is not in good shape, have another lens doesn’t look great, you know, with a long list? Well, once you age, out of your mid-40s, your consumption starts to drop off relative to your income. But obviously, when you hit retirement, it just plummets. And so we’re seeing that huge portions of the advanced world have now reached that point. And if consumption led growth is no longer a possibility, and your export led growth to a place like China is limited and the American start to close off their market, well, then there’s nothing left. So it’s entirely possible that we have likely that we have already been through the last major period of economic growth on a global basis, because of the Europeans are done. And then a lot of the Northeast Asians are done and the Chinese are done. All that is left is North America, where the United States is leading some of the record growth for a mix of reasons part of its single biggest piece is millennial consumption, because they still have years to run in that age bracket where the consumption heavy. And we also have a lot of government investment going in from the Biden administration that will generate debt issues, but it does generate growth, at least in the short and midterm. And we’ve also seen industrial construction spending in the United States explode the last several years as people realize that if they still want stuff, they’re gonna have to build it in whole. And that has at least a decade to run ahead of it. So we’re entering a very sharply multi-bifurcated mantra with that word should be a world in which North America is looking more and more promising for reasons of domestic growth, while as everyone else can’t do consumption-led growth and is losing the ability to export-led growth. And this, unfortunately, is the world we are in until such time as we have a break in some of these producers, where they simply fall off the map altogether. And then we can have all kinds of interesting things. You can have industrial growth and consumption growth in one place. At the same time supply chains that haven’t been replaced break, and you get depression, airy activity and inflation all at the same time. We’re not there yet. But we’re definitely going to get there before the end of this decade.

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