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Web Conference: European and African Economic Outlook 2013

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Growth indicators have showed that Europe’s growth outlook has slowed even further than anticipated in 2013, and it is forecast that the European Union may see the second year of falling economic …

Growth indicators have showed that Europe’s growth outlook has slowed even further than anticipated in 2013, and it is forecast that the European Union may see the second year of falling economic output with even further declines in employment figures. This briefing will seek to identify the reasons for this negative market sentiment and whether or when a change in growth momentum can be expected. The investigation will allow insight into whether there are pockets of growth within Europe and if these will be the catalysts to spark the European engine back to life.

The briefing will also focus on another important region, Africa, where growth momentum has shifted and remained high through the 2012 economic turmoil experienced in Europe. Many African economies are highly reliant on Europe as an export market, but have managed to maintain significantly positive growth rates. Have these economies shifted their economic structures, or have they shifted their export markets?

The briefing seeks to identify the catalysts of growth in these two regions and will identify what could be the most likely outcomes in the short to medium term.

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  • 1. European and African Economic OutlookEuropean and African Economic OutlookGaining Momentum in 2013: When will the regional growthGaining Momentum in 2013: When will the regional growthengines ignite?engines ignite?© 2013 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  • 2. 2
  • 3. Q&ARegional Trends: Europe3
  • 4. Regional Trends: Europe€€ €1EURO4Vinnie AggarwalChief Economist€ €€
  • 5. High Hopes for the Future?5
  • 6. Sink or Swim?Many European Emerging Markets Have Performed Well in 2013 Despite Challenges1.01.52.02.53.0GDPGrowth(%)GDP Growth Comparison - Emerging and ContinentalEurope 2012-2014GDP Growth Through Recessionary Periods, ContinentalEurope, Three Year Comparison-6.0-4.5-3.0-1.50.01.53.0Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4GDPGrowth(%)2008 2009 20106-1.0-0.50.00.51.02012 2013 2014GDPGrowth(%)Emerging Europe Continental Europe-3.0-2.0-1.00.01.02.03.0Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4GDPGrowth(%)2012 Financial Crisis2009 RecessionLonger period of downturn andlonger period to recovery expectedSources: GET-IT and Frost & Sullivan2011 2012 2013
  • 7. Pockets of Economic Growth will Move Europe ForwardPockets of Growth in Europe, 2013 and 2014Western EuropeAutomotive sales areup for the first time in19 months, led byGermany and UKEastern EuropeSignificant investment inenergy projects7Even though economic growth prospects have been downgraded for Europe there are stillregions and industries where innovation or investment will drive developmentSources: GET-IT and Frost & SullivanTurkeyEuropean growthengineRomaniaLocal automotive industryfocus on budget cars willappeal to emerging markets
  • 8. Regional Trends: Europe(United Kingdom)₤₤ ₤8Gary JefferyPartner & Director, Europe₤ ₤₤
  • 9. Gaining Momentum, with Recovery in SightProspects look positive for future growth in energy and chemicals. GDP set to show positive growthin 2013.GDP Growth to Remain Modest in 2013•GDP growth picking up with averageof 0.5% growth expected for 2013•Consumer confidence grows as newcar sales expected to average 3.0per cent growth in 20131.01.21.41.6GDPGrowth(y/y%)9Sources: GET-IT and Frost & Sullivan•The UK is expected to be one of thetop 5 destinations for investment inthe next 2 years•Inflation prospects are down, but nofurther central bank quantitativeeasing expected in 2013•Increased tax revenue will giveadditional fiscal support 0.00.20.40.60.8Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4GDPGrowth(y/y%)2011 2012 2013
  • 10. Could Shale Gas Potentially Deliver Much NeededStimulus to the UK’s Manufacturing Sector?•Coal prices decrease, changingelectricity supply mix and willlead to increased carbon costsin the short-term•Renewable energyrequirements to raise wholesaleelectricity price6,0008,00010,00012,00014,000NaturalGasProductionandImports(mcb)With Decreases in Local Production, Natural Gas Imports HaveIncreased Substantially from 2008 to 201310Shale gas has the potential to serve one-third of the UK’s energy needs. This is likely to give localmanufacturers competitive advantage as electricity costs rise globally.electricity price•The UK’s natural gas supplymix is changingSources: EIA and Frost & Sullivan-2,0004,000Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1NaturalGasProductionandImports(mcb)Domestic Production Gas Imports (Pipeline) Gas Imports (LNG)2008 2009 2010 2011 2012 ‘13
  • 11. Continental Europe11Jan E. KristiansenPartner & Director, Europe
  • 12. The Key Questions: When and How?Growth will remain stagnant in 2013 with key industries breaking groundGrowth Revival Expected in H2 2013 for Many DevelopedEconomies in Europe, 2013•Growth revival expected in H2 2013•Fiscal consolidation expected in thenext 12 months•Structural consolidation measuresexpected to slow in 2014(2.5)(1.5)(0.5)0.51.52.5France Germany Italy Spain UnitedKingdomGDPGrowth(y/y%)2013 Q12013 Q22013 Q32013 Q412•Fiscal deficits expected to fall butdebt-to-GDP ratios will increase•Possible slowdown in structuralreform•High unemployment could lead tosocial influence on policy(5.0)(4.0)(3.0)(2.0)(1.0)0.01.02.02013 Q1 2013 Q2 2013 Q3 2013 Q4IIPGrowth(%)France Germany Italy Spain United KingdomManufacturing Growth is Expected to Lag Economic GrowthRecovery as Regional Interdependencies Continue to StifleExport Orders, Europe, 2013German manufacturinggrowth leads the way inEurope’s recoverySources: GET-IT and Frost & Sullivan
  • 13. Europe’s Economic Engine Needs the Growth Spark20142014Furtherquantitiativeeasing?Growthexpectations20132013Austerity timelinesreconsideredUnemployment at recordhigh of 12.1%Could the elections in20122012Strong austerity measuresUnemployment at 11.0%Budget deficits decreasing,debt-to-GDP ratios increasing13expectationspositive for 2014Could the elections inGermany influencepolicy?• European leaders sign fiscalcompact• 530 Billion Euros allotted toalmost 800 banks• Financial support requested byCyprus and Spain• Significant downgrade in 2013growth forecasts following Q1 poorperformance• Questioning austerity measures leadto protest and social discord - youthunemployment at 40.5% in ItalyWhat will bring the growthspark?Many consider the worst tobe over...
  • 14. Emerging EuropeRoundup14Aroop ZutshiGlobal President & Managing Partner
  • 15. Increased Importance of Emerging EconomiesGDP Growth During the Debt Crisis Remained Resilient inEmerging Europe and Is Expected to Assist DevelopedEconomies in 2014 •Natural gas market integration isessential to lower energy prices as theU.S. shale-gas revolution widens theEU’s cost gap•Increased financial integration willmake emerging economies morevulnerable to flow reversals-1.00.01.02.03.04.05.02011 2012 2013 2014GDPGrowth(%)Developed Europe Emerging Europe15German Exports to Emerging Europe Increased During thePeriod of the Financial Crisis - This Trend is Expected ToContinue01002003004002010 2011 2012Exports($Billion)Developed Europe Emerging Europe18.3%increasesince 20104.2% increasesince 2010Sources: GET-IT and Frost & Sullivan•Labour mobility has increasedinterdependencies•Trade is shifting to more lucrativemarkets in the region•Linkages with global emergingmarkets have increased during thecurrent crisis
  • 16. Poll Question
  • 17. Africa17Hendrik MalanOperations Director, Africa
  • 18. The African Renaissance Will Become Reality in the Next10 Years - Will You be Ready?GDP Growth1990’s 2000’sFDI Inflows2.2% 5.5%1990 20101990’s 2000’s$66.32bn $342.51bn• Agriculture & Agro-processing• Agricultural chemicals• Oil extraction andinvestment in refiningcapability• Construction• Transport, energy, waterNigeriaEthiopiaDRCGhanaCountries with High Growth and InvestmentPotential in Africa, 2013-2015Africa to Average4.8% GDP Growthin 2013Africa to Average4.8% GDP Growthin 201318To take advantage of this long-awaited growth cycle, early entry is vital to ensure competitive positioning- the time is now!Source: Frost & SullivanCivil Wars15 5Foreign Debtto GDP1990’s 2000’s61.8% 37.4%• Transport, energy, watersupply/treatment• Healthcare ZambiaDRCNote: Countries based on score determined fromweighted average of per capita GDP and potentialgrowth, GDP & GDP potential growth, FDI stock andgrowth, export and import growth potential, andpopulation size and population growth potential• Retail and financialservices
  • 19. Leveraging the GIL-100 Index with a Focuson Emerging Market Opportunities
  • 20. Leveraging theGIL-100 Index for HC20Dorman FollowwillPartner & Director, Europe
  • 21. Emerging Markets Contribute Almost 30% to LeadingPharmaceutical and Healthcare Companies’ RevenueAchieversLeadersBest PracticeSales21Emerging Opportunities• Biologics and biosimilars; Vaccines; Moleculardiagnostics• Diagnostics imaging• Health Information Exchange• Technologies to support long-term care• Medical tourismNote: Country banding is done with a specific GDP bracket.
  • 22. GIL-100 Index for Healthcare : Structuring your EmergingMarket Strategy• How should your company prioritize emergingmarkets beyond BRIC countries based on thefactors most relevant to your company andproducts?• Which countries make the most sense asmanufacturing centers based on IP protection,labor costs and access to export markets?Top Line GrowthBottom LineGrowthSalesAttractivenessInvestmentAttractivenessGrowthDrivers22SalesAttractivenessInvestmentAttractiveness?Tier IIPoland, Malaysia,Mexico, PhilippinesTier IChina, India, BrazilCompanies are shifting toward emerging markets for manufacturing and also topenetrate high growth domestic markets
  • 23. Leveraging the GIL-100Index for Energy23John RaspinPartner & Director, Energy &Environment, Europe
  • 24. Energy Trends Will Shape the Future of Economic GrowthPotentialKey EnergyEmergingEconomies Drive• Solar prices aredropping• Shale gas is here tostay• Energymanagementsystems• Large-scale investment inenergy supplyinfrastructure in emergingeconomies will drivegrowth55% 65%EnergyDemandShare(%)World Share of Energy Demand, 2010and 202524Key EnergyIndustry TrendsEconomies DriveGlobal EnergyMarketssystems• Energy fuel mix todrastically changeby 2025European dependence on Russian imports of natural gas will increase asclimate change regulations come into effect. This will leave these countriesvulnerable to supply shocks and limited competition in the market.45% 35%55% 65%2010 2025EnergyDemandShare(%)OECD Non-OECDSource: Frost & Sullivan
  • 25. Poll Question
  • 26. MacroEMI’s ‘Macro to Micro’ Insight into Emerging Markets willhelp you Look at Unexplored MarketsEmerging Market Growth Monitor (EMGM)Global Economic Tracker- Insights andTrends (GET-IT)Integrated emerging market country industryforecastsEconomic insights27MicroWorkshopsQuarterly updates on economic trends andindustry indicatorsSpecific insights from emerging marketexperts. Economic and industry correlationsOn site or virtual workshops customized tobusiness needsFacilitates development of a country pipeline
  • 27. Emerging Market Growth - Executive Insights Briefings –Schedule for 2013Region Spotlight Countries Live Date of SessionEmerging Europe Turkey 10 April 2013Africa Nigeria 23 April 2013Emerging Asia Pacific Myanmar 17 July 201328Latin America Panama 25 July 2013Emerging Europe Czech Republic & Romania 20 August 2013Emerging Asia Pacific Philippines & Vietnam 25 August 2013Africa & Middle East Egypt & Saudi Arabia 19 November 2013
  • 28. Growth Innovation and Leadership: Upcoming Events29GIL 2013: Africa15 August 2013GIL 2013: France17 October 2013GIL 2013: Germany19 November 2013
  • 29. Growth Innovation and Leadership Congress, November17th, Frankfurt, GermanyEMI Track at GIL 2013: Germany - Emerging Market Innovation: A BestPractices Approach to developing your Emerging Markets StrategyGIL 2013: Frankfurt, Germany3019 November 2013gil-events.gilcommunity.com
  • 30. Like the Content: How to Access?Leverage full benefits of:Growth PartnershipServices+Growth Team Membership+GIL Global Community+31ServicesAccess content on www.frost.com orwww.cif.frost.cominformation – myfrost@frost.com
  • 31. Follow Frost & Sullivan on Facebook, LinkedIn,SlideShare, and Twitterhttp://www.facebook.com/FrostandSullivanhttp://www.linkedin.com/companies/450632http://twitter.com/frost_sullivanhttp://www.linkedin.com/companies/4506http://www.slideshare.net/FrostandSullivan
  • 32. Q & A
  • 33. Presenters and Contact DetailsDr. Vinod AggarwalChief EconomistVinnie.aggarwal.frost.comDr. Vinod AggarwalChief EconomistVinnie.aggarwal.frost.comJan E. KristiansenPartner & DirectorJan.kristiansen.frost.comJan E. KristiansenPartner & DirectorJan.kristiansen.frost.comGary JefferyPartner & Director,EuropeGary.jeffery@frost.comGary JefferyPartner & Director,EuropeGary.jeffery@frost.comAroop ZutshiGlobal President &Aroop ZutshiGlobal President &Hendrik MalanOperations Director,Hendrik MalanOperations Director,Dorman Followwill,Partner & Director,Dorman Followwill,Partner & Director,Global President &Managing PartnerAroop.zutshi.frost.comGlobal President &Managing PartnerAroop.zutshi.frost.comOperations Director,AfricaHendrik.malan@frost.comOperations Director,AfricaHendrik.malan@frost.comPartner & Director,EuropeDorman.followwill@frost.comPartner & Director,EuropeDorman.followwill@frost.comJohn Raspin, Partner &Director, Energy &Environment, EuropeJohn.raspin@frost.comJohn Raspin, Partner &Director, Energy &Environment, EuropeJohn.raspin@frost.com
  • 34. For Additional InformationChiara CarellaHead of Corporate CommunicationsEurope, Israel, Africa+44 (0) 207 343 8314chiara.carella@frost.comSamantha JamesMarketing & CorporateCommunications ExecutiveSouth Africa+27 (0)21 680 3574Samantha.James@frost.com35
  • 35. The Frost & Sullivan Story19611961 19901990 TodayTodayEmergingEmerging ResearchResearch19611961––19901990Growth PartnershipGrowth Partnership19901990––TodayTodayVisionary InnovationVisionary InnovationTodayToday––FutureFuture36Pioneered Emerging Market& Technology Research• Global Footprint Begins• Country Economic Research• Market & Technical Research• Best Practice Career Training• MindXChange EventsPartnership Relationshipwith Clients• Growth Partnership Services• GIL Global Events• GIL University• Growth Team Membership• Growth ConsultingVisionary Innovation• Mega Trends Research• CEO 360 Visionary Perspective• GIL Think Tanks• GIL Global Community• Communities of Practice

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