Tech Startup Growth Hacking 101 - Basics on Growth Marketing
25.03.2016 Evolvong prospect for the global economy, china's new normal and its relevance to Mongolia
1. Evolving Prospect for the Global Economy,
China’s New Normal and its Relevance to
Mongolia
Presentation at the Economic research
Institute Mongolia
Bert Hofman, World Bank
Ulaanbaatar, March 25 2016
1
3. The World Economy
Source: ICP Program http://siteresources.worldbank.org/ICPINT/Resources/270056-
1183395201801/Summary-of-Results-and-Findings-of-the-2011-International-Comparison-Program.pdf
Mongolia
4. Asia’s Re-emergence
(Share of World GDP 1-2050 AD)
Source: Maddison and OECD. Note: Maddison’s estimates are in Geary-Khamis dollars; OECD in 2005
PPP dollars.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 1000 1500 1820 1870 1900 1950 1980 2008 2050
Rest of the
World
South Africa
Brazil
Russia
Other OECD
UK
US
Japan
Indonesia
India
China
5. Emerging Markets Catching Up as
OECD Productivity Slows
5Source: Conference Board, staff estimates. Note: Output per employee in 2014 US$ (converted to US$
using 2014 market exchange rates) Labor productivity growth five year moving average centered on final
0
5,000
10,000
15,000
20,000
25,000
-0.3
0.7
1.7
2.7
3.7
4.7
5.7
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Gobal labor productivity growth OECD Labor productivity growth Output per employed person
Output per Employee (rhs)
Global labor productivity growth (lhs)
OECD Labor productivity growth (lhs)
6. Lower Global Inequality, but a Squeezed
(Western) Middle Class
6
Change in real income per global income
percentile 1988-2008
Source: Branko Milanovic
7. An Older, Urban World
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50 60 70 80 90 100
China
2050
Urbanization
Old-age dependency ratio
EU
2050
Japan 2050
India 2050
EU 2010
Brazil 2050
US 2050
US 2010
Nigeria
2050
India 2010
China
Brazil 2010 Korea 2050
Indonesia 2050
Japan
Nigeria
Pakistan 2050
Size of bubbles
corresponds with
population of age 15-65
Indonesia
2010
Philippines
Pakistan 2010
Korea 2010
Russia
Russia
2010
Vietnam 2050
Vietnam 2010
Source: World Bank Nutrition Population and Health
Database, UN Population Database
8. 8
GDP Growth
(Percent)
Source: World Bank.
Note: Several countries were reclassified from middle-income to high-income country status in 2015, including Argentina, Hungary, and Venezuela.
All series have been adjusted to ensure a constant sample according to current income status.
-4
0
4
8
12
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
World High-income countries Developing countries
Global Growth:
Slower in 2015. Modest Pickup 2016 and beyond
9. 9
GDP Growth
(Percent)
Source: World Bank.
Note: Several countries were reclassified from middle-income to high-income country status in 2015, including Argentina, Hungary, and Venezuela. All series have been adjusted to ensure a
constant sample according to current income status.
Regional Forecasts
Current forecast
Change from
October
2014 2015 2016 2017 2015 2016 2017
World 2.6 2.4 2.9 3.1 -0.1 -0.1 0.0
High-income countries 1.7 1.6 2.1 2.1 -0.1 0.0 0.0
Developing countries 4.9 4.3 4.8 5.3 0.0 -0.2 0.0
East Asia and Pacific 6.8 6.4 6.3 6.2 -0.1 -0.1 -0.1
Europe and Central Asia 2.3 2.1 3.0 3.5 0.5 -0.2 0.0
Latin America and Caribbean 1.5 -0.7 0.1 2.3 -0.4 -1.0 0.0
Middle East and North Africa 2.5 2.5 5.1 5.8 0.2 0.7 0.7
South Asia 6.8 7.0 7.3 7.5 -0.1 -0.1 0.0
Sub-Saharan Africa 4.6 3.4 4.2 4.7 -0.3 -0.3 -0.2
13. 13
FED expected to move up
Individual FED Board Member’s projection of
the Federal Funds Rate, percent
Source: Federal reserve board, Financial Times
16. Mongolia’s dramatic export shift
16
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Mongolia’s export share per destination, percent
China European Union United States Russia Japan Switserland Kazakhstan Other
Source: IMF Directions of Trade
17. China’s New Normal
Note: World Bank projections. These assume progressive implementation of reforms announced in the 3rd Plenum of
the Central Committee of the 18th Party Congress
0
1
2
3
4
5
6
7
8
2014 2015 2016 2017 2018 2019 2020
private consumption government consumption gross capital formation next exports GDP
GDP Growth Rate and Percentage Point Contribution to Growth
18. Growing less, but adding more
Change in GDP, Absolute Value, bn. 2005 US$
-1000
-500
0
500
1000
1500
1981 1986 1991 1996 2001 2006 2011
China US Japan Eurozone
Bn. 2005$
Source: World Bank Estimates
19. The Largest Manufacturer in the World
0
2E+12
4E+12
6E+12
8E+12
1E+13
1.2E+13
1.4E+13
2000 2005 2010 2012 2013
China European Union Japan India United States ROW
Current US$
Manufacturing Value Added Current $
Source: World Development Indicators
22. Largest Consumer of many Commodities
Source: World Economic Forum based on BP Statistical review of World Energy 2015, , World Bureau of Metal Statistics, US
Department of Agriculture, JP Morgan, Wall Street Journal,
23. Services now more important than
Industry
39
40
41
42
43
44
45
46
47
48
49
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Service Industry
Percent of GDP
Source: National Bureau of Statistics
24. Though structural change in real terms
is less pronounced
0
0.1
0.2
0.3
0.4
0.5
0.6
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Agriculture Industry Services
Share of GDP, calculated at 2005 constant prices
25. China is still less urbanized than
expected on the basis of income
0
10
20
30
40
50
60
70
80
90
100
100 1000 10000 100000
China
China 1990
China 2000
China
2010
Income per capita, constant
Urbanization
Source: World Development Indicators and Staff Estimates
26. Urbanization will facilitate services
industry
0
10
20
30
40
50
60
70
80
0 10 20 30 40 50 60 70 80 90 100
Services value
added
(% of GDP)
Urban population (% total)
Taiwan, China (1962-2009) Japan (1955-2011)
Korea (1965-2011) China (1978-2011)
27. China’s exports becoming more
sophisticated
-4
-3
-2
-1
0
1
2
3
900 9000 90000
China 1995-2012
South Sudan
Qatar
Singapore
Malaysia
Russia
India
Brazi
Germany
Japan
USA
Economic Complexity Index
GDP Per Capita 2012 (2011 PPP$. Log Scale)
Source: AJG Simoes, CA Hidalgo. The Economic Complexity Observatory: An Analytical Tool for Understanding the Dynamics of Economic
Development. Workshops at the Twenty-Fifth AAAI Conference on Artificial Intelligence. (2011) and https://atlas.media.mit.edu/en/rankings/country/
accessed 9-2—2015
Note: ECI combines metrics of the diversity of countries and the ubiquity of products to create measures of the relative complexity of a country’s
28. China’s exports becoming more
sophisticated
1995 2012
Source: AJG Simoes, CA Hidalgo. The Economic Complexity Observatory: An Analytical Tool for Understanding the Dynamics of Economic
Development. Workshops at the Twenty-Fifth AAAI Conference on Artificial Intelligence. (2011) and https://atlas.media.mit.edu/en/rankings/country/
accessed 9-2--2015
30. China is becoming more innovative
0
100
200
300
400
500
600
700
800
900
1989 1992 1995 1998 2001 2004 2007 2010
Resident Patens Applications per 10000 Population
China India Malaysia Russia Germany USA UK Brazil
31. Rapid real appreciation reduced current
account surpluses
31
-2
0
2
4
6
8
10
12
14
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Current Account
Percent of GDP
80
90
100
110
120
130
140
REER (RHS)
Index, 2010 = 100
Source: World Bank Prospects group
32. More real appreciation to come
Source: World Development Indicators, Staff Estimates
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
700 7000 70000
Series
2
Series
4
Domestic/International
Prices ("Real Exchange
Other countries 2013
China 1991-2013
Income per capita 2013, PPP $ log
USA
Korea
Japan
Australia
Burundi
Eurozo
Norway
SingaporQatar
Luxembour
UK
Cuba
Macao,
33. Importance of external demand
declining
0
5
10
15
20
25
30
35
40
45
50
1980 1985 1990 1995 2000 2005 2010
Eurozone
China
Japan
Exports as a share of
GDP, Percent
Source: WDI
34. Real estate leading the investment
slowdown
0
5
10
15
20
25
30
35
40
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Fixed Asset Investment, yoy % FAI: Real Estate, yoy %
Source: National Bureau of Statistics through
CIEC
35. Consumption hesitantly turning around
Sources: CEIC , World Bank estimates
20
30
40
50
60
70
80
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Consumption Gross Fixed Investment
Share of GDP
40. Rapid Credit Growth Tends to Result in
Non-performing Loans
R² = 0.338
0
5
10
15
20
25
30
35
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
NPLstoGrossTotalLoans
Actual/Predicted Private Credit to GDP
All other countries HIC G20 Non-Asia MIC East Asia MIC China
41. Cost of Environmental Damage
Rising
0
100
200
300
400
500
600
1990 1995 2000 2005 2010 2012
Carbon Dioxide Damage Energy Depletion Mineral Depletion
Net Forest Depletion Particulate Emission Damage
Bn. Current US$
Source: World Development Indicators
42. Though not as a share of GDP
0
2
4
6
8
10
12
1990 1995 2000 2005 2010 2012
Carbon Dioxide Damage Energy Depletion Mineral Depletion
Net Forest Depletion Particulate Emission Damage
Percent of Gross National
Income
Source: World Development Indicators
43. The Big Global Issue
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0 5 10 15 20 25
China
US
EU
Sustainable Emission per Capita: 1.7 ton per year
to keep global warming<2 degrees (IPCC)
India
Latin America
Japan
Russia
South
Indonesia
CO2 emissions per capita
CO2 emissions per Unit of
GDP (2005 PPP $)
Source: World Development Indicators. Note: Emissions exclude change in land
use. Bubble indicates total emissions
47. 47
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
EM Global
BRICS China
Source: World Bank staff estimates.
Note: Cumulated impulse responses of EM and global growth at the two-year horizon. The shock size is such that BRICS growth declines by one percentage point on
impact. The shock size for China is calibrated such that its growth declines by exactly the same amount as BRICS at the end of two years. Solid bars denote the median
and the error bars denote the 33-66 percent confidence bands.
Large Spillovers from Slowing BRICS
Decline in BRICS and China Growth on Other Emerging Markets and World
(Percentage point)
48. 48
Decline in each of the BRICS growth (1 pp) on Global and Other EM growth
(Percentage point)
Source: World Bank staff estimates.
Notes: Cumulated impulse responses at the end of two years due to a one percentage point decline on impact in China growth. EM excludes BRICS. Global is GDP-
weighted average of BRICS, EM, FM, and G7 responses. Bars represent medians, and error bars 16-84 percent confidence bands.
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
Global EM excl. BRICS
China Russia Brazil India South Africa
China a Source of Global Spillovers
49. 49
Slowing China Affects Commodity Exporters More
Decline in China Growth (1 pp) on Emerging Markets Growth
(Percentage point)
Source: World Bank staff estimates.
Left: Cumulated impulse responses of GDP growth, at the two year horizon, due to a one percentage point decline in China growth. For each group, the figures refer to the cross-sectional
average response across all the countries in that group.
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
Commodity exporter Commodity importer
56. 56
U.S. Monetary Policy:
Slower Tightening Cycle; Gap Remains
U.S. Policy Interest Rates
(Percent)
Source: World Bank, Bloomberg, US Federal Open Market Committee.
Note: Left panel: Past tightening cycles refers to average of Fed fund rate hikes during previous tightening cycles (December 86, March 88, February 94,
March 97, June 99, and June 04). Market expectations as of December 15.
0
1
2
3
4
Dec-14 Dec-15 Dec-16 Dec-17
FOMC expectations
Past tightening cycles
Gap between FOMC and Market Expectations
(Basis points)
0
40
80
120
160
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
2016
2017
57. 57
Private Debt and Credit Growth
in Emerging Markets
Source: World Bank, International Monetary Fund, Bank for International Settlements.
Left panel: Weighted-average of debt-to-GDP ratios of households and non-financial corporations in Brazil, Russia, India, South Africa, Mexico, Indonesia, Malaysia, and Turkey. Right
panel: EM with general government debt above 60 percent of GDP in 2015 include Brazil, Egypt, India, Hungary, Morocco, Pakistan.
Number of Emerging Markets with
Elevated Government Debt
(Percent, share of countries)
Financial Market Turbulence: Elevated Debt
(Percent of GDP, percent)
10
15
20
25
80
90
100
110
120
130
2010 2011 2012 2013 2014 2015
Private debt
Credit growth (RHS)
0
20
40
60
80
Debt >
40% of GDP
Debt >
60% of GDP
2007 2015