Amid a slowing, uneven economic recovery in 2011, the world's 200 largest metro economies continued to drive global growth, according to The Brookings Institution in its Global MetroMonitor. But here's the rub for the U.S.: The study reveals that emerging-market metro areas in Asia, Latin America and Eastern Europe were the fastest growing last year, while most American and Western European metros struggled to rebound from the Great Recession.
Meanwhile, both developed and developing countries should prepare for further downside risks, according to a separate World Bank report.
The analysis of per capita GDP (income) and employment changes in the 2010 to 2011 period for 200 of the world's largest metropolitan economies, which account for nearly one-half (48%) of global output but contain only 14% of world population and employment, reveals the following.
90% of the fastest-growing metropolitan economies among the 200 largest worldwide were outside North America and Western Europe. By contrast, 95% of the slowest-growing metro economies were in the U.S., Western Europe, and earthquake-damaged Japan.
The U.S. and United Kingdom collectively accounted for one-half of the bottom 40 metro performers, which registered either lackluster growth or small losses in income and employment.
Only two metro areas in the U.S. - Houston and Dallas - ranked among the 40 strongest economies in 2010-2011. The World Bank rated these developed metro economies highly for their recent strong performances relative to regional peers, including expansion in high value commodities, manufacturing, and business and financial services sectors.
The report also noted, however, that income and employment grew much faster in 2011 than the year before in Seattle and Milwaukee. Both markets benefited from a resurgence in manufacturing, according to the report.
Less than one-half of the 200 metro areas surpassed their pre-recession levels of employment and/ or income by 2011. While nearly all developing Asia-Pacific and Latin American metro areas achieved new highs in both income and employment in 2011, Houston was the only North American metro area did so.
Metro areas specializing in commodities and business and financial services within their countries exhibited the strongest performance. By contrast, metro areas with high concentrations of local/non-market services (education, health care, administrative services, government) or construction registered only sluggish growth last year. Manufacturing accounted for the largest share of output growth in 59 metro areas from 2010 to 2011, including many in which it does not rank as the largest industry.
World Bank Projects Global Slowdown
Developing countries should prepare for further downside risks, as Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth prospects, says the World Bank in its newly released Global Economic Prospects 2012.
The World Bank has lowered its growth forecast for 2012 to 5.4% for developing countries and 1.4% for high-income countries (-0.3% for the Euro Area).
Slower growth is already visible in weakening global trade and commodity prices, the World Bank said.
"Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time," said Justin Yifu Lin, the World Bank's chief economist and senior vice president for development economics.
While prospects in most low-and middle-income countries remain favorable, the ripple effects of the crisis in high-income countries are being felt worldwide.
"An escalation of the crisis would spare no-one. Developed- and developing-country growth rates could fall by as much or more than in 2008/09" said Andrew Burns, manager of global macroeconomics and lead author of the report. "The importance of contingency planning cannot be stressed enough."
Given the United States' super-committee's failure to agree a deficit reduction plan, substantial short-term fiscal tightening is likely, with negative consequences for domestic demand that will feed through to affect Mexican exports, according to the World Bank.
Weak consumer confidence, moderate job growth, and limited real-wage increases will limit the gains in private consumption to about 3.5%.
Furthermore the ongoing re-industrialization in the U.S. is likely to benefit Mexico's manufacturing industry. Restructuring of the U.S. automotive industry expected to take place over the forecasting horizon is also expected to benefit Mexico's manufacturing sector.
Keep up weekly on national news, trends and property leads with the Watch List Newsletter, a weekly pdf that includes other news and leads not found on the CoStar Group web news pages.
Sign up for the Watch List E-Mail Alert. A new issue is published late each Wednesday