2011 Global GDP Overestimated by World Bank

A look at the World Bank's estimates for international GDP rates accents the overestimate of U.S. GDP made by the Commerce Department in the first quarter of 2011. Originally believed to be 1.9 percent, the revised estimate is .4 percent. As a result financial firms such as J.P. Morgan and others have adjusted their 2011 GDP rates downward per the International Business Times. The adjusted U.S. rates range between 1.7-2 percent, .6-.9 percent lower than the World Bank estimate as of August 2011.

Japan, the Eurozone and China, all large economies have smaller than expected GDPs for 2011. These economies plus the U.S. Economy account for more than 50 percent of global GDP meaning for every 1 percent drop in GDP in these areas, the global GDP drops 50 basis points or half a percent. Moreover, for every 1 percent drop in U.S. GDP a corresponding fifth to quarter percent or 20-25 basis point drop in Global GDP is estimated.

The World Bank estimates global GDP for 2011 of 3.2 percent, with corresponding GDPs of 9.3, 2.6, 1.7 and .1 for the four largest economic areas. The Singapore Business Review quotes Credit Suisse as downgrading Chinese GDP to 8.8 percent due to inflationary pressure and tighter monetary policy. The Association of Three Leading Eurozone Economic Groups claims the Eurozone will experience 2011 GDP growth of .47 percent, or 1.2 percent less than the World Bank's estimate.

Collectively, .2 percent less global GDP from the U.S., .24 less from the Eurozone, and .075 less from China adds up to .515 or half a percent assuming approximate percentage shares of GDP of 20 percent, 20 percent and 15 percent respectively. Based on the World Bank estimate of 3.2 percent Global GDP growth, that would mark it down to 2.7 percent.

That's not terrible, but for those countries relying heavily on Global GDP expansion the economic affect will be proporitionally larger. These variables also constantly change with increases and decreases to the price of oil, international events and with methods of calculation. That being the case, any estimate of Global GDP is not set it stone.