Filed under: International markets, Economic data, Oil, Housing

Sudden large, negative financial events can disrupt, or at least critique, even the most bedrock economic tenets, let alone recently-percolated conventional wisdom.

On the heels of the housing and credit market crunches, one conventional wisdom item that’s currently coming under criticism is the notion of “decoupling” [Subscription required] - the theory that despite a slowing U.S. economy, the European and Asian engines of growth would be sufficient to maintain adequate global GDP growth, The Wall Street Journal reported.

The International Monetary Fund published a chapter in April 2007 entitled “Decoupling the Train,” which argued that the U.S.’s mild GDP growth was caused by a housing sector correction. Housing was less global than other commodities, it argued, and hence would not impact the world economy as much.

For example, about two months ago, the IMF projected that global economic growth would slow just slightly in 2008 to 4.8% from 5.2% this year.

Continue reading Maybe the global economy isn’t so global

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This entry was posted on Wednesday, November 28th, 2007 at 4:57 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.