WORLD IN 2050

THE BRICS & BEYOND

• World Economy will double in size by 2032, expanding at an average rate of 3%

• China will overtake the US economy by 2017 in PPP and by 2027 in market exchange rate terms.

• India should become the third’s global economic giant by 2050, and Brazil fourth largest.

World in 2050

• Russia could overtake Germany to become the largest European economy before 2020.

• Economies such as Mexico and Indonesia could be larger than the UK and France by 2050.

• Turkey larger than Italy. • Porland, Vietnam, Malasyia and Nigeria all

have strong long-term potential.

• Emerging economies will grow at an average of 4% per year, compared to only 2% for advanced economies.

• Top 8 countries by 2050: China, U.S, India, Brazil, Japan, Russia, Mexico, Indonesia.

• By 2050, average income will still be higher in DC than in emerging economies.

• China, India, Brazil and other EE will become not just low cost production locations but also increasingly large consumer markets.

• It will be important to understand and adapt to local rules, regulations and customs.

• Some EE may become gateways to larger markets, such as Poland as a gateway to Russia.

• The G7 and the E7 countries combined account for more than 80% of total global GDP

• E7 countries will be more than 50% larger than the G7 countries when measured by GDP

• Currently, the E7 nations are currently just under half the size of the G7 economies

• E7 countries could overtake G7 countries as early as 2017• EE were relatively insulated from the global recession, and G7

nations have been much slower to recover from the global recession.

• China will grow at 7% in the next few years, but it will slow down after 2021 as its economy matures.

• Aging population coupled to higher wages will transform China from an export-driven economy to an consumption driven economy.

• Jobs will move to Vietnam and Indonesia• China could overtake the US by 2017

• Mexico and Indonesia could rise to be amongst the top 10 largest economies in the world by 2050

• Relative decline of the UK economy• Nigeria: could become the world’s fastest

growing economy as a result if its youth and growing working population + good uses of its oil reserves

• The US is expected to retina its top spot in this group on average income levels by 2050.

• That’s another reason for MNCs should not abandon their home markets in the US and the EU

• Decarbonisation & slower GDP growth

• Opportunities & Challenges in Emerging Markets• Opportunities for: Retailers with strong franchise models;

global brand owners, business and financial services; creative industries; healthcare and education providers

• Challenges: mass market manufacturers as china move up market

• Main drivers of growth: • A - demographics {threat of an ageing population]; • B – education: fastest educational catch-up rates in India and

Indonesia• C – Technological Progress

CHINA’S AUTO MARKET

• China’s automotive sector grew at a compound rate of 24% a year between 2005-2011

• Overtook the US as the largest single – country new car market in 2010

• Sales close to 22 million cars by 2020 Future Trends for the Chinese Market: a) Going bigger (SUVs), b) More second-time buyers and they will buy more high-priced cars

• New car sales in China are forecast to contribute 35% of the world’s car market growth between 2011-2020

However increasing urbanization will have a big impact on mobility demandsAir pollution and worsening traffic conditions will prompt officials to implement car use restrictions

GROW GLOBAL: BUILDING BUSINESS IN BRIC COUNTRIES

• BRIC countries are a vast opportunity and are enormous markets that are rich in resources

• Russia: ongoing economic growth and large consumer base, appetite for new FDI to help develop its high-tech businesses, natural resources continue to be a prime theme in the economy. Infrastructure replacement and retrofitting offer potential rewards, Russia is the key regional hub in Eastern Europe.

India

• India: Linguistics legacy has been paramount for India in competing with other developing economies.

• Governance, legal system, and a stock market that is aligned with that of western markets

• India is rich in resources, however, where India enjoys an upper hand is the IT/BPO industry

• Although growth has slowed, the growth BRIC have is sustainable. While legal and infrastructure questions can be an issue, the markets are showing true resilience to the global downturn.

• Population: a) Brazil: 200 million, b) Russia: 142 million, c) India: 1.22 billion, d) China: 1.33 billion

• Size and strength are no longer advantages. Speed and agility are what you now need to make rapid decisions

PROSPERITY AT RISK

• A FUNDAMENTALLY WEAKENED US ECONOMY IS NOT ONLY AN AMERICAN PROBLEM BUT ALSO A GLOBAL RISK

• Many see jobs as the goal, when in fact it is only through restoring American competitiveness that good jobs can be created and sustained.

• Many see income inequality as the central problem, when in fact inequality is the outcome of underlying problems in skills, opportunities and other fundamentals

• Competitiveness: the extent to which firms operating in the US are able to compete successfully in the global economy while supporting high and rising living standards.

• A competitive American economy would produce robust job growth, would enable a highly productive and prosperous middle class

• Competitiveness: hinges on improving productivity in the long run [creating a high value of goods and units per unit of human, capital, and natural resources]

• Will the U.S. competitiveness to decline over the next three years: greater pressure on workers (wages & benefits); firms have more options than workers!

• Firms exposed to global competition were more pessimistic about U.S. Competitiveness

• Respondents in manufacturing have a more negative view of the ability of firms in the U.S. to compete than those in public administration, finance, and sector less exposed to international competition.

• Facilities involving large number of jobs, high-end work, and multiple types of activities located together are moving out of the U.S. much faster than they are moving in.

• 42% of all decisions about potentially moving existing activities out of the USA involved research, development, and engineering activities.

• America’s job challenge is compounded by the fact that activities which moved out of the US tended to involve more jobs than activities retained in

• In today’s global economy American wages and living standards are deeply influenced by whether our productivity offsets lower wages elsewhere

• US Strength: universities; entrepreneurship, property rights, innovation, clusters

• Strength and Deteriorating: skilled labor, logistics infrastructure

• Weakness and Deteriorating: legal framework; regulation, K-12 education system. Tax code