global economy chartbook march 2014 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Global Economy Chartbook March 2014 PowerPoint Presentation
Download Presentation
Global Economy Chartbook March 2014

Loading in 2 Seconds...

play fullscreen
1 / 44

Global Economy Chartbook March 2014 - PowerPoint PPT Presentation


  • 94 Views
  • Uploaded on

Global Economy Chartbook March 2014. Charles Collyns Chief Economist & Managing Director Felix Huefner Deputy Director, Global Macroeconomic Analysis Saacha Mohammed Research Assistant. Key Messages.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Global Economy Chartbook March 2014' - niyati


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
global economy chartbook march 2014
Global Economy ChartbookMarch 2014

Charles Collyns

Chief Economist & Managing Director

Felix Huefner

Deputy Director, Global Macroeconomic Analysis

Saacha Mohammed

Research Assistant

slide2

Key Messages

  • 2014 is expected to see a global acceleration, led by mature economies, although the recent data flow has been mixed.
  • A bumpy Fed exit and contagion to emerging markets are key downside risks.
  • The U.S. economy is poised to gather pace as the fiscal drag fades.
  • Euro Area growth has been positive since 2013Q2, but the recovery is slow and still damped by financial strains.
  • The Japanese economy picked up pace in 2013, propelled by aggressive policy stimulus, but will slow in 2014 as fiscal policy tightens. Greater reform momentum is crucial.
  • China is seeking to maintain growth, while advancing reforms to rebalance its economy.
  • Capital flows to EMs have been volatile, and market access will remain under stress for countries with policy gaps.
  • In addition to cyclical weakness and a tightening of external financial conditions, EM economies need to deal with structural challenges to lift longer-term growth.
slide3

Table of Contents

Global Business Cycle Overview

Economic Policy and Financial Conditions

Capital Flows to Emerging Economies Under Pressure

U.S.: Achieving a Smooth Exit from Policy Stimulus

Euro Area: Still Work to Do

Japan: Will Abenomics Work?

Challenges for Emerging Economies

Page 4

Page 12

Page 16

Page 22

Page 27

Page 31

Page 35

signs of a pick up in the global economy
Signs of a Pick-up in the Global Economy

Real GDP Growth Rate

Consumer Prices

% q/q, saar

% oya

Sources: IIF, Datastream

Last Observation: Q4 2013

Sources: IIF, Datastream

Last Observation: Jan. 2014

stronger growth in mes but em performance has been mixed
Stronger Growth in MEs, But EM Performance Has Been Mixed

Mature Economies: Real GDP Growth Rate

Emerging Economies: Real GDP Growth Rate

% q/q, saar

% q/q, saar

Sources: IIF, Datastream

Last Observation: Q4 2013

Sources: IIF, Datastream

Last Observation: Q4 2013

business confidence has softened
Business Confidence Has Softened

Manufacturing PMI

Industrial Production

% change, 3m/3m saar

index, breakeven=50

Sources: IIF, Datastream

Last Observation: Dec. 2013

Sources: Datastream, Markit Economics, Bloomberg

Last Observation: Feb. 2014

exports and retail sales have picked up
Exports and Retail Sales Have Picked Up

Merchandise Exports

Retail Sales

%3m/3m, saar

%3m/3m, saar

Sources: IIF, Datastream

Last Observation: Dec. 2013

Sources: IIF, Datastream, Bloomberg

Last Observation: Dec. 2013

top 6 risks for the global economy
Top 6 Risks for the Global Economy

Sources: IIFGlobal Economic Monitor, February 2014

emerging market risk scenarios
Emerging Market Risk Scenarios

EM Risk Premia Shock: Long-Term Government Bond Yields

A Spike in EM Risk Premia: Impact on GDP

%; GDP-weighted EM aggregate

% change from baseline GDP level by the end of 2015

Sources: Oxford Economics, IIF

Sources: Oxford Economics, IIF

global risk aversion scenario
Global Risk Aversion Scenario

Global Risk Shock (EM Risk Premia and Global Stock Market Decline): Impact on GDP

U.S. Stock Market Scenarios: S&P 500

index

% change from baseline GDP level by the end of 2015

Sources: Oxford Economics, IIF

Sources: Oxford Economics, IIF

financial conditions remain easy
Financial Conditions Remain Easy

Global Equity Markets

Goldman Sachs Financial Conditions Index*

Index, Jan 2010 = 100

Index, value greater than 100 implies tightening

Source: Goldman Sachs,*Weighted sum of short-term bond yield, a long term corporate yield, the exchange rate and a stock market variable

Source: Bloomberg

smaller fiscal headwinds in 2014 except for japan
Smaller Fiscal Headwinds In 2014, Except For Japan
  • Change in Cyclically Adjusted Fiscal Balances
  • Emerging Economies
  • Mature Economies
  • % of potential GDP
  • % of potential GDP
  • Source: IMF Fiscal Monitor October 2013, IIF
  • Source: IMF Fiscal Monitor October 2013
monetary policy remains easy in me but is tightening in em
Monetary Policy Remains Easy in ME, But is Tightening in EM

Trends in Official Policy Rates

Bank Lending to Private Sector

%, GDP-weighted average (both scales)

% oya

  • Source: Datastream, Bloomberg
  • Source: IIF, IMF
slide17

Capital Flows Have Been Volatile Recently

  • Net Inflows into EM Funds
  • Emerging Market External Bond Issuance*
  • $ billion
  • $ billion
  • Source: EPFR

Source: Thomson Financial; IIF calculations. * Includes bonds issued in an external market, for the 30 major EM countries covered in the IIF's Capital Flows to EM report.

slide18

Capital Inflows to EM Under Pressure

  • Exchange Rate Changes: Then and Now
  • Current Account Balances and Exchange Rate Changes
  • Sources: Bloomberg, IIF.
  • .
  • Sources: Bloomberg, IIF.
  • Current Account Balance is 2014 estimate.
slide19

IIF Capital Flow Trackers Show Resilience

  • Portfolio Debt Inflows to EMs
  • Portfolio Equity Inflows to EMs
  • $ billion, IIF group of 30 economies
  • $ billion, IIF group of 30 economies

Sources: IIF, EPFR, National Sources.

Sources: IIF, EPFR, National Sources.

slide20

Capital Flows Outlook Likely to be Choppy

  • Emerging Market Capital Inflows
  • Emerging Market Private Capital Inflows, Net
  • $ billion, quarterly data
  • $ billion % of GDP
  • Forecast
  • Source: IIF Capital Flows Report January 2014
  • Source: IIF Capital Flows Report January 2014
slide21

Drivers For EM Capital Flows

  • Financial Globalization and Deepening (2002-2012)
  • GDP Growth Differential EM/Mature Economies
  • percentage points
  • total financial assets in % of GDP
  • (foreign assets + foreign liabilities) / GDP
  • Source: IIF
  • Source: IIF Capital Flows Report October 2013
slide23

U.S. Fiscal Consolidation Underway

U.S. Federal Budget Balance

U.S. Public Debt

percent of GDP

percent of GDP

  • Source: Congressional Budget Office
  • Source: Congressional Budget Office
slide24

Housing Sector Turned Around, Balance Sheets Improved

  • Housing Starts and Prices
  • U.S. Corporate Profits and Household Net Worth
  • % of GDP(both axes)
  • millions of homes index, Jan 2000=100
  • Source: Datastream
  • Source: Datastream
slide25

Labor Market Challenges Remain

U.S. Labor Market

  • U.S. Unemployment Rate

percent

  • % of labor force
  • Extrapolation
  • *Mid-point of central tendency projections
  • Source: Datastream
  • Source: Datastream
slide26

Fed Tapering is Underway

  • Fed Funds Target Rate during Fed Tightening Cycles
  • Fed Holdings of Securities
  • $ trillion
  • %, t in months
  • *Market expectations estimated from fed funds future and Eurodollar contracts
  • Sources: Bloomberg, CME Group, IIF
  • Source: Fed
euro area recession has ended
Euro Area Recession has Ended…

Manufacturing PMIs

Real GDP Growth

index, 50=breakeven

% q/q, saar

  • Source: Bloomberg
  • Source: Datastream, IIF
but fragmentation continues
…But Fragmentation Continues…

Cross-Country Dispersion in Business

Sentiment and Bank Lending Rates

Youth Unemployment

% of youth labor force

Stand. Dev., 3mma; DE, FR, IT, ES; all maturity and size

  • Source: Datastream, IIF
  • Source: ECB, European Commission
and disinflation remains a concern
…And Disinflation Remains A Concern

Euro Area Headline Inflation and Projections

HICP Inflation Rates

Percentage change over a year ago

Percentage change over a year ago

  • Source: ECB, Datastream
  • Source: Eurostat, National Sources
inflation and inflation expectations are rising
Inflation and Inflation Expectations are Rising

CPI Inflation

Inflation Expectations

% oya

%, 1-month moving average

Source: Bloomberg

Source: Ministry of International Affairs & Communication

labor reforms key for abenomics success
Labor Reforms Key for Abenomics Success

Base Wage Growth Remains Weak

Gender Gap in Prime-Age

Labor Force Participation (Male – Female)

percent, 2012

percent, oya

Source: Ministry of Health, Labor and Welfare

Source: OECD

fiscal and structural challenges remain
Fiscal and Structural Challenges Remain

Net Government Debt in Advanced Economies

Potential Growth

% of GDP

% y/y

Source: IMF

Source: BoJ, IIF

slide36

Chart on GDP growth per EM region from 2000

  • A Broad – Based Slowdown
  • GDP Growth in Emerging Economies
  • GDP Growth in Emerging Economies
  • percent, y/y
  • percent, y/y
  • Source: IIF
  • Source: IIF
em challenge 1 rising debt
EM Challenge 1 – Rising Debt

Credit Intensity of Growth

  • Change in Non-Financial Private Sector Debt

Ratio of private credit to GDP (%)

  • percentage points, difference between 2007Q1 and 2013Q1
  • Source: BIS, IMF, IIF
  • Source: BIS, IMF, IIF
em challenge 2 aging populations
EM Challenge 2 – Aging Populations
  • BRICS: Age Old Dependency
  • Emerging Markets: Growth in Population Aged 15-64
  • ratio of people aged 65+ over population aged 15-64
  • Percent, average annual growth
  • Source: UN, IIF
  • Source: UN
challenge 3 fading drivers of growth
Challenge 3 – Fading Drivers of Growth
  • Investment to GDP Ratio
  • Investment Efficiency
  • Investment to GDP ratio divided by GDP growth rate
  • Difference between 2012 and 2007 level
  • Source: IIF
  • Source: IIF
challenge 4 domestic and external imbalances
Challenge 4 – Domestic and External Imbalances

General Government Overall Balance

Trends in Current Account Balance

percent of GDP

percent of GDP

  • Source: IIF
  • Source: IMF
iif em bank lending survey tighter conditions
IIF EM Bank Lending Survey: Tighter Conditions

EM Lending Conditions by Category

Overall EM Bank Lending Conditions

Diffusion index (below 50=easing, above 50=tightening)

Diffusion index (below 50=easing, above 50=tightening)

  • Source: IIF Emerging Market Bank Lending Conditions Survey
  • Source: IIF Emerging Market Bank Lending Conditions Survey
slide42

China: Looking for a Soft Landing

Short-term Indicators

Credit, Investment and GDP Growth

  • diffusion index (50=neutral) %, oya
  • %, oya

Sources: Datastream, IIF.

Sources: Datastream, IIF.

slide43

China: Rebalancing Challenges

  • share of GDP
  • share of GDP
  • Source: Datastream, IIF
  • Source: Datastream, IIF
slide44

References

  • Global Economic Monitor, February 2014: http://www.iif.com/emr/resources+3351.php
  • Emerging Markets Bank Lending Conditions Survey- 2013Q4, January 2014: http://www.iif.com/emr/resources+3333.php
  • Capital Flows to Emerging Market Economies, January 2014: http://www.iif.com/emr/capflows201401.php
  • Japan: Abenomics Faces A Tougher Second Year, January 2014: http://www.iif.com/emr/resources+3291.php
  • Structural Challenges to Emerging Market Growth, October 2013: http://www.iif.com/emr/resources+3080.php
  • China: Tale of Three Bears, September 2013: http://www.iif.com/emr/resources+3055.php