Econometrics ; GDP growth in US Essay Example | Topics and Well Written Essays - 500 words

Econometrics ; GDP growth in US - Essay Example When evaluated using the Yuan as a reference, the Chinese economy now stands two-thirds larger than its position in 2004. Of this, over half of the contribution to the growth can be attributed to the GDP increase while the remainder is from statistical factors including the currency exchange fluctuations between the US Dollar and the Chinese Yuan. The Dollar has moved by 23% between 2004 and 2008 (The Economist, 2010). Economists indicate that a repeat of this 4-year trend with moves of over 34% would allow China to surpass the US economy between 2025-2-2028. This further signals that the US Dollar will stabilize at the existing exchange rates. A comparison of the performances of both the economies during the previous decade would put a comparative GDP growth change at 51% amongst both economies. This predicts 2021 as the passing date for the Chinese economy (David Greenaway, 2009). The recent global financial meltdown has however halted the tremendous growth of most economies in the world. While overturning the recent fortunes of the US economy, the crisis has provided enough glimpses into the highly interlinked global economy and demonstrated that even China is not an exception during such periods. The US economy is slowly coming out of a recession and China’s GDP growth dipped below the 10% annual mark for the first time in over a decade. Further, the Chinese government seems to have taken several important steps to continue a strengthening of its currency, helping its exports and the home industry against western competitors (OECD, 2009). The US economy grew by 5.9% during the fourth quarter of 2009, providing a strong impression that the world’s largest economy was on the path to recovery (The Economist, 2010). However, experts have been quick to point out that this growth was largely contributed inventory rebuilding, indicating that such an expansion may not be consistent in the