Emerging like a volcano

Mostly unnoticed, the IMF published its semi-annual World Economic Outlook today (here's the press release), which is always makes for interesting reading. As expected, it slashed its growth forecast for the U.S. in 2008 to 1.9%, versus the 2.8% it expected as recently as July.

Apparently, the IMF is a strong believer in decoupling, as its global growth forecast for next year was slightly revised from to 5.2% to 4.8%. This reflects the strength of emerging market growth, which the IMF expects at 7.4% in 2008 (the July forecast pegged it at 7.6%), led by China's 10% expected surge.

The U.S. economy remains, by far, as the largest in the world. But at the margin (that is, in terms of its share of growth in world output) it will be eclipsed by China and even India this year. Just take a look at the following chart. One may know and understand the numbers, but it is amazing nonetheless.