Thread by @Noahpinion

Today's @bopinion post is about how three star performers over the last 10 years - Germany, South Korea, and Singapore - are now either in recession, or close to it.

The global economic environment has changed, and the tables may have turned.

bloomberg.com/opinion/articl…

Over the long term, rich countries grow at about the same rate. But Germany, South Korea, and Singapore have outperformed the U.S. since the recession, leading many to wonder if their systems are superior.

What have these countries been getting right?

Should we emulate Germany's labor system? Singapore's science investments? South Korea's industrial conglomerates?

BUT, as they say, the worm turns.

First, let's look at Germany. It's now probably in recession.

bloomberg.com/news/articles/…

German manufacturing is slumping, threatening to drag the whole Eurozone into recession.

bloomberg.com/news/articles/…

And it's not just China that's causing declining demand for German products. In fact, it's mostly not China.

bloomberg.com/news/articles/…

What's happening?

Stricter emissions rules may be a big part of it.

bloomberg.com/opinion/articl…

German industry is a giant centuries-old pool of knowledge on how to make internal combustion engines.

And the internal combustion engine is on its way out.

Next, South Korea.

Korea grew in Q2, but it shrank in Q1. It's also on very shaky footing.

Falling inflation suggests a South Korea recession may also be underway.

bloomberg.com/opinion/articl…

As with Germany, manufacturing and exports are the problem.

bloomberg.com/news/articles/…

Whereas in Germany it's cars that are the biggest problem, in Korea it's semiconductors.

South Korea is the semiconductor champion of the world, and the trade war and Chinese slowdown, as well as other factors, are taking their toll on that industry.

bloomberg.com/news/articles/…

But Korea could also be more vulnerable to external shocks because its consumers have taken on a lot of debt over the past decade. What started as a drop in exports could end up as a drop in consumption.

bloomberg.com/news/articles/…

And finally, Singapore.

Again, manufacturing and exports are the big culprit in its second quarter slowdown.

bloomberg.com/news/articles/…

The U.S.-China trade war is probably the big culprit here.

But ironically, Singapore is being bailed out by a flood of capital fleeing Hong Kong, so it may avoid recession.

bloomberg.com/news/articles/…

Anyway, the weakness of Germany, South Korea, and Singapore -- all countries focused on manufacturing and exports -- suggests that something has changed in the world economy.

That "something" might be the end of the China-centric global growth model.

bloomberg.com/opinion/articl…

China's catch-up growth is ending.

It's bringing supply chains inside the country.

And the U.S.-China trade war is forcing companies to pick between China and the rest of the world.

Did Germany, South Korea, and Singapore outperform thanks to their industrial policies, labor policies, and education systems?

Or did they merely surf the China wave until it receded?

Meanwhile, U.S. economic numbers, so far, are holding up.

We're suddenly the best house in a bad neighborhood.

bloomberg.com/opinion/articl…

I still believe we have a lot to learn from Germany, South Korea, and Singapore.

But the worm turns, times change, and today's stars may be tomorrow's laggards.

(end)

bloomberg.com/opinion/articl…