Economic Outlook 2012: Shift Happens
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Economic Outlook 2012: Shift Happens

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Great informative presentation made by Dr. Angel Cabrera at the Economic Outlook 2012 event in Phoenix.

Great informative presentation made by Dr. Angel Cabrera at the Economic Outlook 2012 event in Phoenix.

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  • China’s aging population and one child policy will cause it to grow at a decreasing rate starting in 2020when compared with India whose work force is relatively young and growing! These two powerhouses will be the major contributor of the E7 growth projections
  • Gov’t has slowed stimulus, but private demand hasn’t picked up demand - Families still deleveraging, soft housing markets, tight lending

Economic Outlook 2012: Shift Happens Economic Outlook 2012: Shift Happens Presentation Transcript

  • SHIFT HAPPENSWorld Economic Outlook 2012
    Ángel Cabrera
    Thunderbird School of Global Management
    @CabreraAngel
  • IMF September Forecast for 2012
    Advanced economies
    +1.9% (-0.7% from June)
    Emerging economies
    +6.1% (-0.3% from June)
    World
    +4.0% (-0.5% from June)
  • IMF September Forecast for 2012
    United States
    +1.8% (-0.9% from June)
    Euro Area
    +1.1% (-0.6% from June)
    Japan
    +2.3% (-0.6% from June)
  • Emerging Markets GDP Growth
    Average Real GDP per Capita
    Composition of World Real GDP
    W. Europe
    Asia Dev.
    Asia Emerging
    CEEMEA
    N.A.
    Latin America
    2010-2030E CAGR
    $39T
    $73T
    $180T
    EM:
    42%
    EM:
    52%
    World 3.6%
    EM:
    70%
    Source: Citi Investment Research & Analysis report “Global Growth Generators,” February 2011.
    Note: Asia Developed is comprised of Japan, Australia and New Zealand.
  • Rise of Emerging Markets Trade Flows
    Exports/Imports
    EM Trade as a % of Total World Trade
    Emerging Markets
    Developed Markets
    2009
    2009
    Source: UN Conference on Trade and Development (UNCTAD) Handbook of Statistics 2010.
  • (1) Calculated using purchase power parity exchange rates. Source: Citi Investment Research & Analysis report “Global Growth Generators,” February 2011 and Pricewaterhouse Coopers, “UK Economic Outlook,” November 2009.
  • G7 vs. E7
    U.S., Japan, Germany, U.K., France, Italy and Canada
    China, India, Brazil, Russia, Mexico, Indonesia and Turkey
  • G7 vs E7
    Source: PWC.com
  • What world do you prefer
    Option A: We grow at 2% while others grow at 1%
    Option B: We grow at 3% while others grow at 6%
  • Should we worry?
  • Emerging Markets Driving Global GDP Growth
    200%
    Japan
    Developed
    Emerging
    Italy
    France
    Canada
    UnitedKingdom
    Germany
    UnitedStates
    Netherlands
    Public Debt 2010 (%GDP)
    Spain
    Brazil
    Argentina
    India
    Turkey
    Mexico
    South Africa
    Indonesia
    Korea
    Australia
    China
    Saudi Arabia
    Russia
    Average GDP Growth 2010-2014 (%)
    Source: Citi, Economist Intelligence Unit.
  • Europanic
    Interbank markets sign trouble
    A run on Italian and Spanish debt can make Lehman Brothers seem trivial
  • Europanic
  • Summary
    Explosive mix:
    Slow recovery, even recession in developed economies
    Increased fiscal and financial uncertainty
    Rebalancing necessary
    Internal: from public to private demand.
    External: from advanced economy to developing economy demand
    Worries about sovereign bonds, translated into worries about banks holding that debt
  • Areas of attention
    Fiscal consolidation
    Not too fast or it will kill
    Not too slow or it will feed uncertainty
    Just right!
    Manage looming crisis
    Support weak links that can trigger domino effect: european sovereign debt, banks, ease housing troubles
    Rebalance global trade
    Learn new acronyms
    E7
    E2E
  • Global Business Dialogue - Nov 10-11
    Thunderbird School of Global Management
    @Thunderbird