Economische update

1. The Return of a Monster?
The dark side of secular stagnation
November 2015
www.ing-diba.de
Carsten Brzeski
Chief Economist

2. Global cooling…
2

3. …has brought back recession fears
3

4. Chinese headaches
4

5. What you see is not always what you get
5

6. And China is contagious for other emerging market economies
6
GDP-growth year-on-year %

7. US – To hike or not to hike?
7

8. Labour market still has some dark spots
8

9. US policy rate expectations
9

10. Eurozone balancing act continues
10

11. Credit growth remains lacklustre
11

12. Optimism and reality
12
-6
-4
-2
0
2
4
2007 2008 2009 2010 2011 2012 2013 2014 2015
Eurozone GDP growth rate (% yoy)
ECB forecast actual data

13. 13

14. Car country Germany
14

15. But before the first run out of the room to get some happy pills…
15

16. …there are some rays of hope
16

17. Different Chinese growth model
17
Industry + Construction
Services

18. US labour market is strong…
18

19. …and household finances are in much better shape
19

20. Eurozone confidence is still robust...
20

21. ...with some Eurozone rebalancing…
21

22. …driven by external tailwinds…
22

23. BUT…the secular stagnation and deleveraging issue
23

24. Low oil prices are not a blessing for everyone
24

25. Debt – the ticking time bomb in China?
25
0
50
100
150
200
250
300
2000 2007 2014
China - Debt-to-GDP ratio (%)
Household Corporate Government Financial

26. Eurozone – the tough difference between change and level
26

27. Pick-up in investment will be key…
27

28. 28
…but leverage remains a crucial hurdle
50
55
60
65
70
75
80
85
90
95
100
2005q1
2005q4
2006q3
2007q2
2008q1
2008q4
2009q3
2010q2
2011q1
2011q4
2012q3
2013q2
2014q1
2014q4
2015q3
Gross debt households in % GDP
United States
Japan
Euro area
100
110
120
130
140
150
160
170
2005q1
2005q4
2006q3
2007q2
2008q1
2008q4
2009q3
2010q2
2011q1
2011q4
2012q3
2013q2
2014q1
2014q4
2015q3
Gross debt non-financial corporations in % GDP
United States
Japan
Euro area
Source OECD

29. It is time to get up…
29

30. The Eurozone’s structural problems
30

31. Diverging competitiveness…
31 26.11.15 Bitte Präsentationstitel über Menüpunkt "Ansicht", "Kopf- und Fußzeile" anpassen

32. 32

33. Drivers of change
33

34. Autonomous driving: The autonomous driving biomobile
34
Source: Futureclick.

35. Autonomous driving: Brightest future for self-driving cars in US
and China
35
Source: IHS Automotive 2014.

36. Autonomous driving: Autonomous driving in perfection
36

37. Smart cities
37
Source: Nationale Plattform Zukunftsstadt.

38. Robotics: The cook who knows 2,000 recipes by heart
38
Source: Computerbild.

39. Robotics: Change in competitiveness due to robotics
39
Source: BCG 2015.

40. Robotics: Labor-cost savings
40
Source: BCG 2015.

41. Robotics: The Robot Journalist
41
Source: TheGuardian; Getty Images.

42. Robotics: The Robots are already here
42
Source: IFR.

43. Big data
43
Source: Datafloq.

44. 3d printing
44

45. But will there be a real economic impact?
45
Source: The Economist.

46. Potential economic impact of IoT
46
Monitoring and managing illness, improving wellness
Condition-based maintenance, reduced insurance
Operations optimization, equipment maintenance, health and safety, IoT-
enabled R&D
Operations optimization, predictive maintenance, inventory optimization,
health and safety
Organizational redesign and worker monitoring, augmented reality for
training, energy monitoring, building security
Automated checkout, layout optimization, smart CRM, in-store personalized
promotions, inventory shrinkage prevention
Energy management, safety and security, chore automation, usage-based
design of appliances
Public safety and health, traffic control, resource management
Size in 2025. $ billion, adjusted to 2015 dollars.
Source: McKinsey 2015.
Logistics routing, autonomous cars and trucks, navigation560-
850
930-
1,660
210-
740
160-
930
170-
1,590

47. Developed vs developing world
47
Health-care spending in advanced economies is twice that in developing
economies
Higher values in advanced economies outweighs higher number of
emerging market households
Higher adoption and values in advanced economies, but large number of
retail settings in developing markets
Higher costs and wages in advanced economies raises value of impact
Larger investments in automation in advanced economies, but large number
of factories in emerging markets
Higher adoption in advanced economies outweighs larger number of
developing economy deployments
Higher costs in advanced economies
More autonomous vehicles in advanced economies, but larger number of
cities and populations in developing markets
Transportation/shipping spending higher in advanced economies
Source: McKinsey 2015.
Reasons for different levels of impact%

48. Industrials: a wide open opportunity
Energy efficiency, home comfort and security
will be key areas of Industrial focus
IoT can help reduce home energy consumption
by over 40% in various applications
48
Source: ABB; Goldman Sachs Global Investment Research.

49. What do we need?
Connectivity infrastructure builds the backbone of Industry 4.0
Source: Cisco VNI 2015; Cisco Global Cloud Index, 2014.
49

50. Are countries laying the right foundations?
50
NAC: National absorptive capacity, 55 indicators, e.g. banking and finance, education, governance, suppliers, R&D, technology skills.
Rankings of countries‘ Industrial Internet of Things enabling factors
Source: Accenture; Frontier Economics.
NAC score

51. Don’t fear the monster but face the reality
51

52. QUESTIONS?
52

53. Disclosures Appendix
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