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Dragons and other global forces

One of my many memorable travels was to China in the 1980s. At that time, I ran an international adventure travel company and one of the tours I organized was a train trip through China. Naturally, we visited the Great Wall of China in the mountains on our journey from the south, westward, then to the north and east.

What I loved most about such trips was the unexpected, such as a visit to the starting point of the Great Wall along the sea coast. Standing on the shore, our guide pointed seaward and said that the wall once began in the ocean as a dragon’s head and its body extended inland across China as the Great Wall. (It eroded away over the centuries but since my trip, was replaced with a replica.)

Now that it is the Year of the Dragon in the Chinese zodiac – from January 23, 2012 to February 9, 2013 – I am drawn to think about the changes that have occurred in China since that trip. Who could have predicted such a dramatic change in such a short period of time? Now China is a formidable force in the world. But even China is susceptible to forces playing out around the world.

An IHS Global Insight One report, by Todd Lee, Xianfang Ren and Alistair Thornton, expects a great slow down in China in 2012, as exports are hurt by a drop in foreign demand for their products. Although year-on-year growth came in above expectations at 8.9 percent, IHS Global Insight projects GDP growth of 7.5 to 8 percent for 2012, with risk to the downside.

Canada is also being carried along by these global winds of change. The Canadian Forecast Executive Summary by IHS predicts that Canadian economic growth could slow to 1.8 percent in 2012, similar to the growth pattern expected in the United States. A big pickup in Canadian output is anticipated beginning in 2013, with real GDP advancing at above a 2.5 percent pace, as domestic and foreign demand accelerates amidst renewed economic optimism. The threat to our growth lies outside our borders: the Eurozone and the global banking system. 

Another of the many economic forecasts I have received is the annual business outlook survey by the Association of Equipment Manufacturers (AEM) based on a poll of members. It gathers data about anticipated sales of the machines and equipment that build and repair roads, bridges, houses, offices, schools and other infrastructure worldwide.

In 2011, the construction machinery business in the U.S. reportedly grew 18.6 percent compared to 2010, in Canada it rose by 14.7 percent and the rest of the world it gained 14.7 percent.

Looking ahead, they expect Canadian construction machinery business overall to be 9.0 percent higher in 2012 than 2011, then increase 9.8 percent in 2013 and 7.3 percent in 2014.

In the U.S., the construction machinery business is predicted to grow 10.8 percent in 2012, 9.9 percent in 2013, and 8.1 percent in 2014.

It looks like the economic dragon will be a bit subdued this year, but hopefully will end the year with a roar.