Year ahead 2020 v2
•Download as PPTX, PDF•
0 likes•107 views
Media Tel Year Ahead Jan 8, 2020. Preso given at Waldorf Hotel, London. More of a curation in fact. Economies, markets, media, outlook.
More Related Content
What's hot
What's hot (20)
Similar to Year ahead 2020 v2
Similar to Year ahead 2020 v2 (20)
Recently uploaded
Recently uploaded (20)
Year ahead 2020 v2
- 1. YEAR AHEAD 2020 ALEX DE GROOTE / MEDIATEL JAN 2020
- 2. OVERVIEW OF ECONOMIES AND MARKETS ….. WHAT WE ARE LOOKING FOR ■ Global economy to show signs of modest recovery in 2020/1 to around 3% yoy ■ UK and Euro Area to remain below par, at around 1% growth ■ Major structural challenges:Climate change;Trade; Geopolitics; Digital ■ BUT government monetary policy remaining loose / supportive ■ LEADING to ongoing asset price inflation …. AND markets still very robust ■ WithYET more innovation in MediaTech changing the shape of the world economy…. ■ 2020:A big year for the USA. US Presidential election … runners and riders – thanks Betfair
- 3. GLOBAL GDP GROWTH IN % REALTERMS
- 4. KEY POINTS ON GLOBAL ECONOMY ■ GDP is the single most important indicator to capture all economic activity ■ For past two years, global growth outcomes have deteriorated, amidst persistent policy uncertainty and weak trade/ investment flows.OECD estimate global GDP growth to have been 2.9% in 2019. Forecasts it to remain around 3% for 2020-21. ■ Short-term country prospects vary with the importance of trade for each economy. GDP growth in USA is expected to slow to 2% by 2021, while growth in Japan and euro area is expected to be c0.7 and 1.2% respectively. China’s growth continue to edge down, to c5.5% by 2021. India is world’s highest growth economy. ■ Other emerging-market economies are expected to recover only modestly, amidst imbalances in many of them. Overall, ‘growth rates are below potential’. ■ Big structural issues: 1/ Climate change; 2/ digitalisation are ongoing structural changes for our economies. In addition, 3/ trade and 4/ geopolitics are moving away from the multilateral order of the 1990s. ■ Middle East / Iran ? ■ In mature economies, monetary and fiscal policy remains loose.
- 5. UK GDP GROWTH IN % REALTERMS
- 6. KEY POINTS ON UK ECONOMY ■ UK GDP growth has been on declining trajectory for almost 5 years. ■ The economic outlook is unusually uncertain given the risks around exit from the European Union.The UK economy is also exposed to global financial risks, a further slowdown in the world economy and rising protectionism ■ Assuming a smooth transition ending after 2021, activity should grow c1% in the near term. Brexit-related uncertainty may holding back investment until there is clarity about future trading arrangements. Weak-ish global economic prospects may slow the recovery in exports. ■ Inflation is projected to slow to below 2%.Therefore monetary policy should continue to support activity and keep inflation close to target. E.g interest rates to remain low. Government likely to intervene to address any Brexit-related disruption or a weakening of economic growth. ■ Government already announced a significant increase in spending for the fiscal year 2020- 21 in the Spending Round, set to add around 0.2 percentage point to growth.The government has also signalled future tax cuts and additional spending increases
- 7. Real GDP forecast - Annual growth rate (%), 2021 or latest available
- 11. Boris Bounce ? Everyone has a view …. ■ BEAR:We are unlikely to see a Boris bounce in 2020 because that mirage depends largely on there being only positive benefits from ending the uncertainty ■ BULL:Yes, we see a modest improvement in growth, felt largely through the near-term impact on business investment, thanks to the election result and the reduction in uncertainty (especially around the possibility of a hard Brexit) ■ LIGHT BULL: More of a “Boris sigh” (of relief), that no-deal is off the agenda — for 2020, at least.There is likely some pent-up business investment demand that has been held back by the uncertainty over the past few years ■ SITTING ONTHE FENCE:The definitive election result should support business and consumer confidence to some extent in Q1, helping the UK avoid recession. But Brexit “cliff-edge” fears will persist and businesses will remain in the dark about the content of any future trade deal with the EU ■ LIGHT BULL:With a sizeable majority in parliament, Boris can now deliver whatever form of Brexit he negotiates with the EU. Brexit uncertainty has, therefore, declined.The fiscal stimulus that has been promised will also help to increase aggregate demand.We are, therefore, likely to see a “Boris honeymoon” involving increased public spending, lower taxes and a stronger sterling during 2020
- 12. BUTWHAT, IF ANY, EVIDENCETO DATE ? IT IS STILL EARLY DAYS (I)
- 13. Survey data since the UK election…. ■ IHS Markit and the Chartered Institute of Procurement and Supply (Cips) found that business optimism soared to the highest level since September 2018 ■ The survey of about 650 service sector companies straddled the election, with firms responding between 5 Dec and 19 Dec, suggesting the unexpectedly decisive result may have influenced business optimism ■ Business confidence in the British economy has leaped to its highest level for more than three years following the Conservatives’ election win, according to a survey of company directors. ■ For the first time since spring 2018, firms have become optimistic about the economic outlook, with a key confidence measure swinging into positive territory and hitting 21% in December, up from -18% in November ■ The IoD’s main confidence measure – which is the net balance of those firms that are optimistic minus those that are pessimistic – had been negative for more than 18 months.
- 14. ATTHE BEGINNING OF A NEW DECADE MARKETS AND ASSETS ARE AT ALLTIME HIGHS … Quantitative easing creating more credit for the banks, there is a steady increase of liquidity into stock markets. Stocks are rising since sovereign debt derivatives are losing money Is there a rational explanation for the contradiction that world stock markets are so strong, whilst the world economy is quite weak? The US stock market’s valuation is already at its highest in history, surpassing the peaks of 1929, 1937 and 1999/2000
- 20. Lots of M&A activity (since Brexit) … including UK Media being taken over
- 21. GLOBAL ADVERTISING: 2010S = A DECADE OF UNINTERRUPTE D GROWTH …
- 22. AND A PERIOD OF STAGGERINGTECH INNOVATION
- 23. Sources ■ OECD ■ Guardian ■ FT ■ Simon French ■ MediaTel ■ Statista ■ DeGroote Consulting