News / Economy

Car Index Indicates Growth Potential High in Developing Nations

The International Monetary Fund hints it may cut global growth forecasts again next month when it updates its projections for the world economy.  The global lending institution says worldwide growth is weaker than expected due to continuing uncertainty in Europe and the US.  But while many agree the global recovery has been weak, some economists point to the rising number of automobiles in developing nations as a sign that the world's economy is moving in the right direction.  
 
Despite forecasts for a slowdown in the global economy, a little known economic indicator is starting to gain traction. The so called "car index" is an attempt to measure the world's middle class based on the number of people who own cars.
 
Uri Dadush is head of the global economics program at the Carnegie Endowment for International Peace. "Ownership of cars is going to explode, is exploding at the moment in the developing world, a sign that the middle class is exploding.  And the reason for that is, is there are about 70 countries with a population of about three billion people who are approaching a threshold of income, about $4000 per capita where the middle class really increases very, very rapidly," he said. 
 
Dadush says the relative rise in average incomes means greater demand for non-essential goods. "Because that's the threshold of income where people begin to have enough to buy all sorts of things.  And it so happens that the things they will buy are the sorts of things that Japan, Germany and the United States excel at producing," he said. 
 
But the IMF says the economic downturn which began in 2008 has also led to reduced consumer spending in developed nations.  Managing Director Christine Lagarde says uncertainty over the debt crisis in Europe and the possibility that expiring tax cuts and massive government spending reductions could send the U.S. economy into a tailspin - remain the biggest risks to the global economy.
 
"We clearly still foresee a gradual recovery, but the global growth that we have forecasted 12 months ago, that we have revisited six months ago, is likely to be yet a little bit weaker than we had anticipated," she said. 
 
Add to that, rising food prices and increased volatility in the Middle East - and Lagarde says economic growth next year is likely to be slower than the group's earlier forecast of 3.9 percent. "Small decimal points for sure, but what is characteristic is that our forecast has trended downward," said Lagarde. 
 
Although slower growth in China and the challenges in Europe and the U.S. remain problematic, Dadush believes the prospects for global growth may be better than the IMF forecasts would suggest. "Notwithstanding the fact that they're going through a slowdown at the moment, the underlying drivers of growth in developing countries are extraordinary," said Dadush. 
 
Recent surveys show consumer spending in developing countries has increased three times faster than in advanced economies, with car ownership rising at a sharply higher rate than in developed nations.
 

You May Like

Report: $60 Billion Leaves Africa Illegally Each Year

Report by joint UN and African Union panel says African countries need to take concrete measures to stop illegal money flow from continent each year More

Video Spy Murder Probe Likely to Further Strain British-Russian Relations

Some analysts say Russian Tu-95 bombers were flying near British airspace to warn Britain about an inquest into a murdered Russian spy More

Mugabe Defends Image Amid Controversy at Close of AU Summit

He rejects concerns about how the West might perceive his leadership, saying he's focused on African development More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Spy Murder Probe Likely to Further Strain British-Russian Relationsi
X
Henry Ridgwell
January 31, 2015 10:50 PM
Relations between Russia and the West are set to become even more strained amid an inquiry in London into the murder of a former Russian spy. Lawyers at the inquiry accuse Russian President Vladimir Putin of directing a "mafia state." Meanwhile, Royal Air Force fighters intercepted Russian bombers close to British airspace this week, prompting authorities to summon Moscow’s ambassador. Henry Ridgwell reports.
Video

Video Spy Murder Probe Likely to Further Strain British-Russian Relations

Relations between Russia and the West are set to become even more strained amid an inquiry in London into the murder of a former Russian spy. Lawyers at the inquiry accuse Russian President Vladimir Putin of directing a "mafia state." Meanwhile, Royal Air Force fighters intercepted Russian bombers close to British airspace this week, prompting authorities to summon Moscow’s ambassador. Henry Ridgwell reports.
Video

Video Ukrainian Neighborhood Divided Over Conflict

People in eastern Ukraine’s Donetsk and Luhansk districts find themselves squarely in the path of advancing Russian-backed rebels, who want to take back the territory they held at the beginning of the conflict last year. Many local residents are afraid, but others would welcome the change, even when a rebel shell lands in their neighborhood. From the Luhansk district, 15 kilometers from where the Ukrainian government marks the front line, VOA’s Al Pessin reports.
Video

Video Threat of Creeping Lava Has Hawaiians on Edge

Residents of the small town of Pahoa on the Big Island of Hawaii face an advancing threat from the Kilauea volcano. Local residents are keeping a watchful eye on creeping lava. Mike O’Sullivan reports.
Video

Video Jefferson's Library Continues to Impress, 200 Years Later

Two hundred years after the U.S. Congress purchased a huge collection of books belonging to former President Thomas Jefferson, it remains one of America’s greatest literal treasures and has become the centerpiece of Washington’s Library of Congress. VOA’s Deborah Block reports.
Video

Video Egypt's Suez Canal Dreams Tempered by Continued Unrest

Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Pro-Kremlin Youth Group Creatively Promotes 'Patriotic' Propaganda

As Russia's President Vladimir Putin faces international pressure over Ukraine and a failing economy, unofficial domestic groups are rallying to his support. One such youth organization, CET, or Network, uses creative multimedia to appeal to Russia's urban youth with patriotic propaganda. VOA's Daniel Schearf reports.
Video

Video Filmmakers Produce Hand-Painted Documentary on Van Gogh

The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Issues or Ethnicity? Question Divides Nigeria

As Nigeria goes to the polls next month, many expect the two top presidential contenders to gain much of their support from constituencies organized along ethnic or religious lines. But are faith and regional blocs really what political power in Nigeria is about? Chris Stein reports.
Video

Video Rock-Consuming Organisms Alter Views of Life Processes

Scientists thought they knew much about how life works, until a discovery more than two decades ago challenged conventional beliefs. Scientists found that there are organisms that breathe rocks. And it is only recently that the scientific community is accepting that there are organisms that could get energy out of rocks. Correspondent Elizabeth Lee reports.
Video

Video Paris Attacks Highlight Global Weapons Black Market

As law enforcement officials piece together how the Paris and Belgian terror cells carried out their recent attacks, questions are being asked about how they obtained military grade assault weapons - which are illegal in the European Union. As VOA's Jeff Swicord reports, experts say there is a very active worldwide black market for these weapons, and criminals and terrorists are buying.
Video

Video Activists Accuse China of Targeting Religious Freedom

The U.S.-based Chinese religious rights group ChinaAid says 2014 was the worst year for religious freedom in China since the end of the Cultural Revolution. As Ye Fan reports, activists say Beijing has been tightening religious controls ever since Chinese leader Xi Jinping came to office. Hu Wei narrates.
Video

Video Theologians Cast Doubt on Morality of Drone Strikes

In 2006, stirred by photos of U.S. soldiers mistreating Iraqi prisoners, a group of American faith leaders and academics launched the National Religious Campaign Against Torture. It played an important role in getting Congress to investigate, and the president to ban, torture. VOA's Jerome Socolovsky reports.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid

World Currencies

EUR
USD
0.8845
JPY
USD
117.71
GBP
USD
0.6643
CAD
USD
1.2669
INR
USD
62.019

Rates may not be current.