World economy appears to be heading for slower growth.

1. World Economy –
Risk and Threats
Paul Young CPA,
CGA
December 18, 2018

2. FR
Paul Young - Bio
• CPA, CGA
• Financial Solutions
• SME – Risk Management
• SME – Emerging Technology
• SME – Business Process Change
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

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Agenda
• GDP Growth 2018 and beyond
• Carbon Tax Threat
• Housing Affordability
• Global Trade
• Wages / Stagnation
• WTO Reforms
• Rise of Global Protectionism
• Taxation Pressures
• Conclusion

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Introduction
• The world is heading to perfect storm
due to trade wars, higher interest rates,
stagnant wages, new carbon taxes,
geopolitical events and affordability of
housing
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5. FRGDP Forecast
Source - https://www.nsnews.com/heads-of-world-bank-imf-say-risks-of-trade-tensions-growing-
1.23488385
This World bank is underestimating other issues
• Geopolitical events (Iran, Mali, North Korea, etc
• Housing affordability
• Cost of living
• Government corruption
• Poor environmental and labor laws – Emerging
markets
• Cost of living will be impacted by countries pushing
carbon tax agenda

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Carbon Tax Threat
• Why Carbon tax won’t work
• Carbon tax take money out of the
economy as it pushes up consumer
prices. Consumer spending drives
25% of GDP for many countries
• China and emerging markets
continue to struggle to clean up
their environment
• Carbon to effective they would
have to be $4,400 ton.
• No govt will raise carbon tax
to this high as it would kill an
economy

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Housing Affordability
Source - https://www.ppforum.ca/event/an-affordable-place-to-call-home-a-review-
of-global-housing-affordability-policies-with-liz-forsyth/ or
https://www.imf.org/external/research/housing/index.htm
• Home equity drives household finances
• Housing affordability continues to impact many countries (Canada, Singapore, China, Australia, etc.
• There are systemic issues with housing (Land, development fees, construction cost, property
taxes, etc)
• Interest rates are on the rise globally
• Household debt continues to rise

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Top Exporting Countries
Source - http://www.worldatlas.com/articles/exports-by-country-20-largest-
exporting-countries.html
FORECASTED GDP GROWTH
http://www.gbm.scotiabank.com/English/bns_econ/forecast.p
df

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Wages / Stagnation
Source - https://www.huffingtonpost.ca/2018/07/09/oecd-report-unprecedented-
wage-stagnation-canada-jobs-developed-countries_a_23477970/
• Wage growth continues to be under pressure
• More and more jobs are moving back to countries
like USA due higher labor and shipping costs
• Wages are not keeping pace with inflation
• More and more job churning is occurring across
the globe
• Business continues to asses the cost of labor as
part of their business rationalization

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WTO Reforms
• USA and China (Subsidies) –” With support from
Brussels and Tokyo, Washington wants the WTO
to crack down on subsidies for state-backed
enterprises, overcapacity in steel and other basic
industries, and on the practice of forcing investors
to hand over valuable technology. ”
https://www.reuters.com/article/us-usa-trade-
wto-china/china-will-propose-wto-reforms-but-
dont-try-to-trap-us-beijings-wto-envoy-
idUSKCN1NO20J
• New WTO dispute mechanism -
https://business.financialpost.com/news/econom
y/eu-proposes-new-wto-reform-to-safeguard-
dispute-settlement-body
• USA is seeking wide-range of WTO reforms -
https://www.bloomberg.com/news/articles/2018
-12-12/u-s-rejects-the-eu-s-trade-reform-
proposal-putting-wto-at-risk
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Rise of Global
Protectionism
• Many countries seek fair trade deals -
https://www.rt.com/business/446746-eu-
blames-us-wto-crisis/
• USA has large trade imbalances that it
wants reduced -
https://www.thebalance.com/trade-
deficit-by-county-3306264. USA trade
imbalances have been that way since 1975
• Global supply chains are very integrated
which could be impacted by global
protectionism -
https://www.descartes.com/knowledge-
center/global-supply-chain-visibility-
solutions-breaking-down-silos-b2b-
integration
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Taxation
Pressures
Source – Ernst an Young
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Conclusion
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• Many countries are faced with key decisions due to both
their fiscal management cycle and sluggish economy
• Carbon tax agenda will have impact on the global
economy but will not reduced emissions
• Governments around the world need to fixed the
systemic issues with affordability of housing
• The era of low interest rates is now over. You can expect
gradual increases of interest rates
• Countries will continue to push for fair trade practices.
Countries like India, China and other emerging markets
need to open up their economy to further imports and
FIPA
• Poverty will not be eliminated unless government
dresses systemic issues facing the low income earners
within their various countries.
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