Gap narrows between economic growth in developing, developed world

A significant change in the relationship between growth in the developed and developing world is taking place. Growth in the developing world is slowing while the developed world accelerates. As a result, the difference between the two is narrowing.

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Growth in the world economy slowed from a rapid 5.2 percent in 2010 to a sluggish 2.7 percent in 2013. Looking forward it appears likely that total world growth will start turning around in 2014 and reach at least 3 percent by 2015. However, growth in the developing world may not reach the bottom until 2015. A significant change in the relationship between growth in the developed and developing world is taking place.  

In 2010 growth in the developing world was a blistering 7.6 percent while growth in the developed world was much less at just 3 percent. The difference between the two was 4.6 percentage points. Now growth in the developing world is slowing while the developed world accelerates. As a result, the difference between the two is narrowing and could reach just two percentage points in 2015.

Slowed growth in the developing world

Although the developing world will still be growing more rapidly than the developed world in 2015, the difference from earlier years is remarkable. Growth in the BRIC's - Brazil, Russia, India and China; the leaders in the developing world - slowed considerably in the last few years. In 2010 China was growing at 10.4 percent but has since fallen to about 7 percent. Brazil fell from 8.1 percent to 2 percent; Russia from 4.5 percent to 2 percent and India from 10.5 percent to 5 percent. What accounts for the change?

Growth in the developing economies rose rapidly in a period of high commodity prices and low interest rates. Interest rates are now rising and commodity prices are falling. As a result, growth will fall back to a more sustainable rate of about 4 percent in developing countries, assuming a world recession is avoided, while growth rises from the extremely low levels experienced recently in developed countries to at least 2 percent.

What this means for chicken consumption

Economic growth in developing countries is important for stimulating chicken consumption, however low grain prices are even more important. If grain prices fall in 2013 as expected, slower growth in developing countries will be more than offset by the lower cost of chicken. World growth in chicken production and consumption should therefore accelerate significantly in the next few years. 

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