Small vs Big

 Is it possible for small economies to avoid the business cycles of large economies?  (They can have different long-term trend growth rates, that's clear enough)

I've talked about this before.   I have added two countries to the 'Small 6': Belgium and New Zealand, so that the 'Small 6' has become the 'Small 8'   The conclusions haven't changed.  When the 'Big 8' (EU, US, China, Japan, Russia, India, Brazil and the UK) slow down, the 'Small 8' (and by implication all small economies) do too.  The 'Small 8' economies are :Australia, Belgium, Canada, Israel, New Zealand, South Africa, Switzerland, and Sweden.  The choice has been driven by the countries for which I have a long enough data series.  

As before, where I do not have a PMI because it does not go back long enough, I have estimated a value from a similar time series.  For example, in Australia there is a PMI calculated by S&P Global, sponsored by Judo Bank , as well as a PMI calculated by the Australian Industry Group (AIG).  For the period before the Judo Bank PMI is available, I have used the 7-month centred moving average of the AIG series as Australia's representative PMI.

Moral of the story: electorates often blame the government of the day for an economic downturn.  For many if not most countries, however, the downturn is "imported" from the world's largest economies.  As the old saying goes, "when America sneezes, the rest of the world catches a cold".

Click on chart to see a clearer image.