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Eastern Europe in the Global Economy - AIMRI Conference Prague 2012


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Eastern Europe in the Global Economy - AIMRI Conference Prague 2012

  1. 1. Eastern Europe in the Global Economy November 2012 By Ruth Stanat President SIS International Research AIMRI Conference, Prague 2012Navigate the Global Economy tm
  2. 2. Table of Contents• New Market Landscape• Decision Points• Country Profiles• Case Study• Conclusions
  3. 3. New Market Landscape 2013Regions Trends 2013Western Europe Slow growth or recession in many markets Economic uncertainty Corporate and Structural Reform Higher taxes in some markets Ageing population, mixed population growth ratesNorth America Economic recovery under pressure New taxes from Healthcare reform, early 2013 Ageing population, slow but present population growthLatin America Growth estimates ~ 3-6% Growth in energy, commodities, consumer markets Growing populationsAsia High growth markets >5% growth Slowing manufacturing Slowing China Growing populations, Young societies (except China and Japan)Middle East Potential fallout from political instability Growing economies, young populations CONFIDENTIAL 3Africa High growth markets >5% growth
  4. 4. Bad News Paralysis? Sources: 4
  5. 5. Decision Points: What “Wins” Today? Sources of Competitive Advantages:But… corporate performance isbased on factors beyond bleak or Speed / Time to marketoptimistic economic projections. Productivity Political and economic stability•Are the fundamentals strong? Innovation•Are any industries showing promise? Infrastructure•What’s next for slowing economies? Cost / Quality mix Market access Economies of Scale 5
  6. 6. OpportunitiesMajor Global Trends:
  7. 7. Is Eastern Europe Overlooked?• Foreign Investment – Eastern Europe FDI to reach around $172 billion by 2014. (PWC)• Automotive Industry – Automotive giants have discovered the potential of Eastern Europe. Volkswagen, for instance, established various production facilities and numerous companies are following. 7
  8. 8. Data Points• Figure shows the gross domestic product based on purchasing-power-parity (PPP) valuation of GDP• 2012: $2,827.98 billion, with a 3.959% growth in GDP• PPP in US Dollars for Central and Eastern Europe is forecasted to rise to $3,316.76 billion by 2015Source EconomyWatch 8
  9. 9. Trends in Eastern Europe 9
  10. 10. Country Profile: PolandGrowth amid the Euro Zone crisis – Ranked 6th on 2011’s list of “worlds most attractive investment countries” (UN Trade & Development) – FDI in 2011 grew 46% vs EU average rate of 17% – Polish GDP forecast to grow 3.5% in 2012. (World Bank)Robust Human Capital – More than 87% of Polish university students master at least one foreign language.Vibrant Consumer Market – Domestic spending in Poland grew by 14.5% in 2011 Sources: China Daily; 10
  11. 11. Country Profile: Czech Republic• Third largest machinery market within the EU27 (Machinery output per GDP)• Main exports include: – Manufactured goods – Machinery – Cars and Transport Equipment – Beer• The auto industry remains the largest single industry and accounts for nearly 24% of Czech manufacturing.• The Czech Republic is a stable and prosperous market economy. – This is due to the conservative and inward-looking Czech financial system. Sources: Investopedia 11
  12. 12. Country Profile: Russia• Main exports include: – Oil and Oil Products – Natural Gas – Wood and Wood Products – Metals – Chemicals – Weapons and Military Equipment• Russia surpassed Saudi Arabia as the world’s leading oil producer.• Russia is the second-largest producer of natural gas.• Russia holds the world’s largest natural gas reserves, as well as the second-largest coal reserves.• Gazprom, the state-run gas monopoly, is the world’s largest producer and exporter. 12
  13. 13. Other Countries• Hungary – The private sector accounts for more than 80% of GDP. Foreign ownership and investment in Hungarian firms are widespread, with a cumulative FDI worth more than $70 billion.• Slovakia – Cheap and skilled labor, low taxes, a 19% flat tax for corporations and individuals, no dividend taxes, and a relatively liberal labor code are Slovakias main advantages for foreign investors.• Ukraine – Ukraines economy was buoyant despite political turmoil; real GDP growth exceeded 7%, fueled by high global prices for steel - Ukraines top export - and by strong domestic consumption, spurred by rising pensions and wages. Sources: CIA World Factbook 13
  14. 14. Conclusions• Managers can find opportunities beyond the economic bad news• Eastern Europe may be overlooked in the global economy• Eastern Europe may be an attractive alternative to other parts Europe for some managers• New opportunities for investors are possible in this level playing field 14
  15. 15. Sources•• markets.html•••• Europe/year-2012/ 15