Global Economic Outlook and Risks
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Global Economic Outlook and Risks Is Growth Shifting from Emerging to Advanced Economies? Emilio Rossi [email protected] November 25 th , 2013
Transcript of Global Economic Outlook and Risks
Global Economic Outlook and Risks Is Growth Shifting from Emerging to Advanced Economies?
Emilio Rossi [email protected]
November 25th, 2013
World GDP Growth by Region
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Assuming that America sorts out its fiscal problems…
…US interest rates are bound to rise over coming months and years.
For the US this would reflect a strengthening economy.
Elsewhere, however, it may be less welcome.
Unhappy response to some very mild US policy pronouncements earlier this year.
The Oxford Economics forecast builds in a gradual rise in US bond yields (to 4 per cent by end-2016), with no financial market shocks.
One Major Cloud Over the Horizon
U.S. INTEREST RATES
3
From the Strongest to the Weakest
The BRICs Is slowdown inevitable ?
The USA Will it surge again ?
Japan Some hope of growth ?
The Euro Zone (and the UK) Little hope of growth ?
4
BRICs - Overall risk fairly stable at 2013 levels
5
6 2010 2011 2012 2013 0
3
6
9
12
China
Brazil
Russia
India
BRIC’s Short-term Interest Rates
EM : Middle class still growing
7
EM - Labor costs remain low
8
(in per cent of GDP; 3 year moving average)
1990 1993 1996 1999 2002 2005 2008 2011 10
20
30
40
India
China
Brazil
Russia
BRIC: Gross Fixed Investment
9
EM to account for larger share of global BM output
Source: Oxford Economics Industry Service
11
BRIC Competitiveness being eroded
From the Strongest to the Weakest
The BRICs Is slowdown inevitable ?
The USA Will it surge again ?
Japan Some hope of growth ?
The Euro Zone (and the UK) Little hope of growth ?
12
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 50
70
90
Households
Corporate Sector*
* Non-financial corporations.
2000 2002 2004 2006 2008 2010 2012 90
100
110
120
130
140
150
160
170
* In real terms.
(2000 = 100)
US Debt/GDP Ratios US House Prices*
US construction activity strengthening
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15
Source: BP
Shale boom helping US competitiveness
US manufacturing recovering nicely
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From the Strongest to the Weakest
The BRICs Is slowdown inevitable ?
The USA Will it surge again ?
Japan Some hope of growth ?
The Euro Zone (and the UK) Little hope of growth ?
17
Japan’s New Economic Policy Main thrust (Three Arrows) double the monetary base in two years provide a large fiscal stimulus enact significant reforms
Main aims raise inflationary expectations restore economic growth raise equity prices lower the exchange rate
Main risks higher government bond yields (though the BoJ will buy
massive amounts of long-term bonds) raising the consumption tax in 2014
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Monetary Base
(January 2007 = 100)
2007 2008 2009 2010 2011 2012 2013 2014
50
150
250
350
450
550
United States
UK
Euro Zone
Japan
19
Monetary Base
20
2007 2008 2009 2010 2011 2012 2013 2014
50
150
250
350
450
550
United States
Euro Zone
Japan
UK (January 2007 = 100)
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Global Growth supports World Trade
From the Strongest to the Weakest
The BRICs Slowdown is inevitable but still high growth
The USA It will surge again if it sorts out its fiscal problems
Japan Some hope of (slow) growth but challenging experiment
The Euro Zone (and the UK)
Little hope of growth ? 22
