China is poised to race ahead of the US as the world’s largest producer of manufactured goods. This prediction by Global Insight put US down to world number two because of its continuing economic woes.

The report has been compiled for the Financial Times by Global Insight, a US-based economics consultancy firm. It claimed that as early as next year, China would account for seventeen percent of all the manufactured goods in the world with a value-added output of $11,783 billion. US would be just a tad behind with sixteen percent of all manufactured goods coming from its factories.

Till last year the US was in the first place, accounting for a fifth of the world’s manufactured goods and was expected to maintain its position for at least another four years. Last year China was in the second place with 13.2 percent. The large-scale downward revision in the report has come in the wake of an economic slow down in the US brought on by a severe crisis in the housing market and heightened by surging fuel costs and rising prices all of which have led to reduced consumer spending.

However, China has been fighting high inflation and a fluctuating stock market in its own backyard. Thus if numbers are adjusted according to inflation rates and put in constant prices, the predictions look better for the US since its inflation over this period is expected to be lower than that of China.

-Kalyani Mookherji