Developed world: Consumer spending volume, pre-recession peak = 100Post-financial 106crisis recoveriesare prolonged 104 Normal past recessions 102 Past recessions with financial crisesTypical features of a post-crisis decade•Credit growth: Weak 100•House prices: Fall in real terms•Unemployment: Stubbornly high 98•GDP growth: Weak•Banks: Financial repression 0 1 2 3 Years after pre-recession peak Source: IMF
Surging ahead…or still digging out? 2. The centre of gravity shifts The cost of the crisis Difference, in % terms, of real output per head before the recession started in 2007 compared with 2012 (forecast) % Sources: National governments, Haver, EIU
Fastest-growing economies:Next five years 0 1 2 3 4 5 6 7 8 9 China India Nigeria Vietnam Indonesia Colombia 2. The centre of gravity shifts Egypt Turkey Brazil Russia South Korea BRICs Mexico South Africa CIVETS US Canada Other EMs Japan UK G7 Germany France Italy Real GDP, average annual % change, 2012-2016. Source: Economist Intelligence Unit
Income catch uphas a long way to runGDP per head 2012 (estimated) US$ S Korea Taiwan Russia Brazil Argentina Turkey Mexico South Africa China India 0 5,000 10,000 15,000 20,000 25,000 Sources: Economist Intelligence Unit, CountryData
Emerging markets havebetter demographics 45 40 2008 2016 35 30 25 20 15 2. The centre of gravity shifts 10 5 0 Russia Turkey Japan Italy Indonesia US Brazil Greece Canada South Africa China India Egypt Germany Colombia Vietnam Old age dependency ratio: ratio of population aged over 64 to 15-64. Source: Economist Intelligence Unit, Country Data.
Ageing:needn’t be all bad news! 2. The centre of gravity shifts
Cities, China:Unprecedented urbanisation • By 2025 around 1bn living in China’s cities • By 2025 15 cities with 25m+ population • By 2025 200+ cities with 1m+ population • By 2025 170 new mass transit systems built • By 2025 40bn sq m of floor space built • By 2014 China’s urban population increases by 80m China urban inflows, 2010-20. Denser colour=greater inflows. Source: China Regional Forecasting Service,Economist Intelligence Unit.
Sub-Saharan Africa will beTHE key driver of urbanisation growth Other US and Canada 7000 Middle East Europe 6000 Latam and Caribbean Sub-Saharan Africa Rest of Asia 5000 India China • LDCs rise to from 69 to 82% 4000 of global urban population 3000 • Driven by Sub-Saharan Africa 2000 • – from 7 to 17% 1000 0 2010 2020 2030 2040 2050 Urban population (millions) Source: United Nations Population Division
Globalisation:The story so far 3 Make anywhere, control globally • 2000s onwards • Death of distance • “The earth is flat” 2 Make globally, control at home • 1990s, big rise in FDI • Cost-cutting, outsourcing • Rise of anti-globalists 1 Sell abroad, manufacture at home • 1960s-1980s • Global markets, standard products • Operations controlled from home base
Making sense of it all ‘Frugal innovation’ is here to stay • OECD middle class faces prolonged austerity • Emerging markets: more scale than wealth The emerging MNC’s day has come • It’s been good for us, now it will be good for them • Investment in other EMs as well as the ‘old’ world Complexity and speed: technology accelerating it all • Globalisation of labour market • ‘Leapfrog’ technologies