Buried deep in the Encyclical Letter issued on the eve of the G8 Summit, Pope Benedict XVI warns: “Sometimes modern man is wrongly convinced that he is the sole author of himself, his life and society.” Many would agree that the annual talking-shop for eight rich, northern hemisphere nations taking place in Italy on Wednesday has an inflated view of its own influence – although this sense of self-importance is now diminishing given the powerful unwinding of global economic forces that have been decades in the making. But there are those that go further and reckon the G8 is now almost irrelevant and that the really important economic action is to be found further south and east.
That view is wrong. Sure the likes of China and India are seeing their economies grow while much of the developed world shrinks. But emerging countries are not yet big enough, in absolute terms, to ride to the rescue of the global economy. For example, last year's combined gross domestic product for G8 countries was about $22,000bn, using current exchange rates. The total for China, India, Brazil and Mexico – the four largest emerging economies, excluding G8 member Russia – was less than a quarter of that.
Another problem is that the slump in global demand desperately needs consumption to come back with a bang. Leaving aside whether that is healthy in the long run, those spenders are still largely to be found in the G8. Private consumption there totalled $14,000bn last year, according to Economist Intelligence Unit data, seven times more in dollar terms than that in China, India, Brazil and Mexico combined. Of course, emerging countries will grow ever bigger. The fate of today's crisis, however, still lies within the G8 – if not necessarily in the hands of its Summit participants.