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© 2014 IHS
Global Economics & Country Risk Conference
ihs.com
IHS
The 2040 economy: Long-term growth determinants
Elisabeth Waelbroeck Rocha, Chief International Economist, IHS, +1 33 1 76 76 3087, [email protected] Pascal Huet, Director Economy & Air Transport, Airbus G. Mustafa Mohatarem, Chief Economist, Public Policy Center, General Motors Company
12 November 2014
ECONOMICS & COUNTRY RISK
© 2014 IHS
1974-2014 in numbers
3.553 Increase in world population between 1970 and 2014
4.5 Increase in number of persons aged 80 and above between 1970 and 2014
30% Share of population aged 0 to 14 in 2014
3.4% Percentage increase in real GDP between 1980 and 2014
5.5% Percentage increase in world exports between 1980 and 2014
1.4 Increase in number of persons aged 0 to 14 between 1970 and 2014
© 2014 IHS
2014-2040 in numbers
2.3 Increase in number of persons aged 80 and above between 2014 and 2040
22% Share of population aged 0 to 14 in 2040
3.1% Percentage increase in real GDP between 2014 and 2040
4.5% Percentage increase in world exports between 2014 and 2040
1.05 Increase in number of persons aged 0 to 14 between 2014 and 2040
1.795 Increase in world population between 2014 and 2040
3.553
4.5
1.4
5.5%
30%
3.4%
© 2014 IHS
Key questions for the coming decades
• Can emerging countries sustain the growth rates they have recently achieved?
• How long will it take them to reach the GDP per capita level of advanced economies?
• Will wage disparities continue to drive globalisation or will these disappear over time?
• Will trade continue to outpace GDP growth? • If so, will the benefits diffuse to the domestic economies and be broadly distributed,
or will it increase regional disparities?
• If not, will growth be mainly domestic driven or regionally driven? Will the type of goods that are traded change?
• How much will technological progress support growth? • The emerging countries could skip some steps on the development ladder
• The new technologies could foster a return to localised production systems
4
MUSTAFA MOHATAREM Chief Economist, General Motors
BRICS: TEMPORARY STUMBLE OR LONGER SLOWDOWN?
• BRICs appear to have decoupled from the developed countries following the global financial crisis
• Timely stimulus and strong starting positions allowed them to sustain growth as others stumbled
• The euphoria is slowly melting away - China is slowing - India slowed, but is making a slight comeback - Brazil is stagnant - Russia is on the verge of a recession
• Is this a stumble, or harbinger of longer-term slowdown?
INTRODUCTION
EMERGING ECONOMIES BECAME A MAJOR SOURCE OF WORLD ECONOMIC GROWTH AFTER 2001 WITH CHINA LEADING THE WAY
Contribution to Global Real GDP Growth
Source: World Bank; Calculations: General Motors Company
-4%
-2%
0%
2%
4%
6%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Other Developing EconomiesBrazil, India, Russia, Indonesia, South Africa, TurkeyChinaAdvanced EconomiesWorld Growth
BUT NOW THEY ARE SLOWING COLLECTIVELY
0%
2%
4%
6%
8%
10%
12%20
01
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Real GDP Growth of Large Emerging Economies
China, India, Brazil, Russia, Indonesia, South Africa, Russia
Source: World Bank; Calculations: General Motors Company
¶ Pre-crisis growth among emerging markets was believed to be consistent with the Washington Consensus – the set of development strategies focusing, in part, on macroeconomic stability, privatization, and liberalization
¶ Emerging markets posted mixed economic performance during the Great Recession ¶ Post-crisis developments highlight economic vulnerabilities with emphasis on addressing economic
imbalances, structural inefficiencies, and policy mismanagement
POST-CRISIS, SLOWDOWN IN EMERGING MARKET GROWTH IS BROAD
Source: World Bank; Calculations: General Motors Company
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004-07 2010-13China 10.1 11.3 12.7 14.2 9.6 9.2 10.4 9.3 7.7 7.7 12.1 8.8India 7.9 9.3 9.3 9.8 3.9 8.5 10.3 6.6 4.7 5.0 9.1 6.7Korea 4.9 3.9 5.2 5.5 2.8 0.7 6.5 3.7 2.3 3.0 4.9 3.9Brazil 5.7 3.2 4.0 6.1 5.2 -0.3 7.5 2.7 1.0 2.5 4.7 3.4Mexico 4.3 3.0 5.0 3.1 1.4 -4.7 5.1 4.0 4.0 1.1 3.9 3.6Russia 7.2 6.4 8.2 8.5 5.2 -7.8 4.5 4.3 3.4 1.3 7.6 3.4Turkey 9.4 8.4 6.9 4.7 0.7 -4.8 9.2 8.8 2.1 4.0 7.3 6.0Indonesia 5.0 5.7 5.5 6.3 6.0 4.6 6.2 6.5 6.3 5.8 5.6 6.2Poland 5.3 3.6 6.2 6.8 5.1 1.8 3.9 4.5 1.9 1.6 5.5 3.0Argentina 9.0 9.2 8.4 8.0 3.1 0.1 9.1 8.6 0.9 3.0 8.6 5.4South Africa 4.6 5.3 5.6 5.5 3.6 -1.5 3.1 3.6 2.5 1.9 5.2 2.8Thailand 6.3 4.6 5.1 5.0 2.5 -2.3 7.8 0.1 7.7 1.8 5.3 4.3
Average Annual GrowthGreat Recession
IT IS NOT GUARANTEED THAT GROWTH WILL RETURN TO THE GOLDEN DAYS AS EMERGING ECONOMIES LACK ROBUST INSTITUTIONS THAT PROVIDE LONG TERM STABILITY
Standard Deviation of Real GDP Growth 10-year moving average
0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%
10.0% All Advanced Economies All Developing Economies
Source: World Bank; Calculations: General Motors Company
BRAZIL IS ONE TYPICAL EXAMPLE
Brazil Real GDP Growth
Source: World Bank
-5.0%-3.0%-1.0%1.0%3.0%5.0%7.0%9.0%
11.0%13.0%15.0%
After the period of what some called an economic miracle in 1968–73 with more than 11% growth, the economy fell back to slow and volatile pattern with 3.0% in the 80s and 1.7% in the 90s
1961-1969 5.9% 1970-1979 8.5% 1980-1989 3.0% 1990-1999 1.7% 2000-2009 3.3% 2010-2014* 2.8%
Note: 2014 real GDP growth is a forecast
FISCAL AND EXTERNAL IMBALANCES AND INFLATIONARY PRESSURE RESTRICTING GROWTH POTENTIAL
-15
-10
-5
0
5
10
15
-15 -10 -5 0 5 10 15 Current Account Balance, % of GDP**
Gov't Budget Balance, % of GDP*
JPY ZAR BRL
INR
IDR EUR RUB
Twin Surpluses
Twin Deficits
USD
TRY
Source: National Central Banks
0.3% 1.5%
3.3%
4.5%
6.4%
6.5%
7.6% 7.8%
8.9%
0%
2%
4%
6%
8%
10%
12%
14% Y/Y % Change
Inflation Target
Inflation Target Range
Current Inflation Rates
Prev. Month Rates
CPI Inflation vs Central Bank Targets
AFTER THREE DECADES OF 10% ANNUAL GROWTH, CHINA HAS BECOME A SIGNIFICANT PLAYER IN WORLD ECONOMY; AS GROWTH SLOWS DOWN, WHAT WILL HAPPEN TO WORLD PRICES?
90
100
110
120
130
140
150 China Export Price Index
Source: China Customs
WHAT IF CHINA CONTINUES TO FOLLOW JAPAN’S PATH AS IT HAS FOR THE PAST DECADES -- GROWTH FALLING TO 4% INSTEAD OF THE WIDELY EXPECTED 6-7%?
-
10,000
20,000
30,000
40,000
China(1997-2013)
Real GDP per Capita
-10%
-5%
0%
5%
10%
15%
20% Real GDP growth
Per-Capita GDP vs. Long Term Growth
Source: World Bank, Conference Board; Calculations: General Motors Company
WILL INDIA LIVE UP TO ITS EXPECTATIONS WITH SIGNIFICANT STRUCTURAL IMBALANCE REMAINING IN ITS ECONOMY?
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
India: Balance of Payments Current Account Balance as a % of GDP
0%
2%
4%
6%
8%
10%
12%
14%
16%
2007 2008 2009 2010 2011 2012 2013 2014
CPI inflation marginally below the central bank's 8% target
Consumer Price Inflation
Central Bank 8% Consumer Price Inflation target
Policy Rate
Percent, y/y%
Source: India Ministry of Statistics/Programme Implementation, Reserve Bank of India
FALLING OIL PRICES WILL FURTHER DEPRIVE RUSSIAN ECONOMY
-15%
-10%
-5%
0%
5%
10%
15%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Year Over Year Real GDP Growth
Source: Federal State Statistics Service/Central Bank of Russia
Source: The Economist
POST RECESSION, GLOBAL TRADE HAS BEEN VERY SLOW, PROVIDING LESS LIFT TO ECONOMIES THAT DEPEND ON EXPORTS
-60%
-40%
-20%
0%
20%
40%
60%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
World Japan Developing Asia
Source: International Monetary Fund
COMPETITION WILL INTENSIFY AMONG EXPORT DEPENDENT COUNTRIES. IS JAPAN STARTING A CURRENCY WAR?
Source: Wall Street Journal
0.000.020.040.060.080.100.12
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Yuan/Yen
0.00
5.00
10.00
15.00
20.00
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Won/Yen
Both Korean Won and Chinese Yuan have appreciated against Japanese Yen by 30% since 2010. It is hard to believe the Korean and Chinese governments will watch at the sideline if the Yen continues to weaken by design
LAST, THERE ARE SO MANY UNPREDICTABLE FACTORS -- FROM GEOPOLITICAL SHIFTS TO NATURAL DISASTERS -- THAT COULD CHANGE THE COURSE OF ECONOMIC DEVELOPMENT AND THROW ECONOMIC FORECASTS OFF TRACK
Source: GM compiled data
2011 – a year full of unknowns
Q1 Q2 Q3 Q4 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Arab Spring Revolution
Japanese Earthquake
Severe Weather in the U.S.
European Debt Crisis
U.S. Debt Ceiling Debate
Thailand Flooding
• Considerable uncertainty regarding the near term outlook for the large emerging economies
• Led economic growth in the 2000s
• Outperformed following the global financial crisis - Timely stimulus - Government intervention - Dividend from the “Washington Consensus”
• Policies will have to change to restore growth momentum
• Will politics allow the necessary change?
SUMMARY
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Air transport outlook
Presented by: Pascal Huet Head of Economy & Air Transport - Airbus
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IHS Global Outlook Conference
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Aviation’s benefit -
23 minutes
2 hours
4 – 12 hours
20 hours
The first commercial flight was 100 years ago
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Aviation is a major driver of the world economy
58.1 m
illion
Job supported World-wide
Globally contributes
$2.4
trillion
Aviation’s global economic impact
21st If aviation was a country ranked
by GDP
2,970,000,000 passengers carried worth of cargo shipped
by air
Source: ATAG (2012 figures), Airbus
$6.4 trillion 2% of global man-made CO2
emissions come from aviation
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Future of Air Transport
They can feel
The “Inspired entrepreneurs”
They can calculate
The “market analyst”
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25 years ago….
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Oil Crisis Oil Crisis Gulf Crisis AsianCrisis
9/11 SARS
73%
Financial Crisis
September 14
Air travel has proved to be resilient to external shocks
Source: ICAO, Airbus
73% growth through multiple crises over the last ten years
World annual traffic (RPKs - trillions)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
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Air fares negatively driven by fuel price surge since 2003
$46 $43 $40 $44 $65$91
$116 $133$187
$123 $138$174
$208 $21014% 13% 13% 14%
17%
22%
26% 27%
33%
26% 26%29%
31% 31%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Airline fuel expenses (billion $) Share of total costs
x5
Source: ICAO, Airbus
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0
5
10
15
20
25
1980 1985 1990 1995 2000 2005 2010
World inflation adjusted average yield stabilizing after strong decrease in the 80s and the 90s
Cents per RPK in 2013 US$
Source: ICAO, IATA, Airbus
Fairly stable
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Globalisation has been an important driver
Source: ICAO WASA database, Airbus
0
500
1,000
1,500
2,000
2,500
3,000
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Number of bilateral air services agreements
More than
2,550 bilateral air services agreements between more than 170 countries
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Despite “ups and down”, GMF traffic forecasts track the long term trend
0
2
4
6
8
10
12
14
16
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
Historical traffic
GMF 2014
GMF 2008
GMF 2000
GMF 1990
Poly. ( GMF2000)Poly. ( GMF1990)
World annual traffic (RPKs - trillions)
Source: ICAO, Airbus
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0
50
100
150
200
250
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
High oil prices here for the long term…
Brent oil price (nominal US$ per bbl) Forecast History
Source: IEA, IHS Energy, Airbus
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-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Passenger traffic is highly correlated to GDP growth
Real GDP growth (%)
GDP
Air Traffic
Air Traffic growth (%)
Source: IHS Global Insight, ICAO, Airbus
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-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
Underlying drivers indicate a positive economic outlook
Year-over-year evolution (%) World real GDP
Source: IHS Global Insight, Airbus
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A two-speed economic world
* 54 emerging economies
** 32 advanced economies
Source: IHS Global Insight, Airbus
Comparison of year-over-year GDP growth
-4%
-2%
0%
2%
4%
6%
8%
10%
1982 1986 1990 1994 1998 2002 2006 2010 2014 2018
Emerging economies*
Real GDP growth (%) History Forecast Emerging economies will continue to lead the pack
Advanced economies**
Page 34
September 14
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The World of 2040 will be very different from today
1- US 2- Japan 3- Germany 4- France 5- Italy 6- Russia 7- UK 8- Canada 9- Spain 10- Brazil
Source: IHS Global Insight, Airbus
1- US 2- China 3- Japan 4- Germany 5- UK 6- France 7- India 8- Brazil 9- Russia 10- Italy
1- China 2- US 3- India 4- UK 5- Brazil 6- Germany 7- Japan 8- Indonesia 9- Russia 10- France
GDP ranking based on nominal GDP expressed in US$
1990 2015 2040
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Emerging economies are driving future growth
2033
54% 67% 59% 50%
Today 36% 69% 42% 38%
Source: IHS Global Insight, Ascend, Airbus
Emerging economies (54 countries) All other countries (150 countries)
GDP (Nominal GDP in US$) Population Passenger trips Fleet in service
1990 15%
70% 15%
17% 15%
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0.01
0.10
1.00
10.00
0 10 20 30 40 50 60
2013 trips per capita
North Americans and Europeans are the most willing to fly today…
Source: Sabre (annualized September 2013 data), IHS Global Insight, Airbus |
*Passengers originating from respective country
Bubble size proportional to population
2013 GDP per capita (thousands $US)
Europe ~1 trip per capita
North America 1.6 trips per capita
China 0.25 trips per capita
India 0.06 trips per capita
22% of the population of the emerging countries took a trip a year in 2013
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0.01
0.10
1.00
10.00
0 10 20 30 40 50 60
…but by 2033, China’s potential will reach European levels
Source: Sabre (annualized September 2013 data), IHS Global Insight, Airbus |
*Passengers originating from respective country
Bubble size proportional to population
66% of the population of the emerging countries will take a trip a year in 2033
2033 trips per capita
2033 GDP per capita (thousands $US)
India 2033 0.26 trips per capita
China 2033 0.95 trips per capita
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Page 38
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Urbanisation to increase
49%
60%
67%
0%
10%
20%
30%
40%
50%
60%
70%
80%
-
1
2
3
4
5
6
7
8
9
10
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Rural
Urban
Urban share
billion History Forecast
Urban population: 1.3B 2.3B 3.5B 5.0B 6.4B
World population and share of urban agglomeration evolution
Source: UN population division, Airbus
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Global Middle Class to more than double
679 697 673 264 261 252
1,413
2,782
4,450
0
1,000
2,000
3,000
4,000
5,000
2013* 2023 2033
Global Middle Class** (Millions of people)
Emerging countries
World Population
% of world population
8,500
63%
7,900
48%
7,200
33%
Source: Kharas and Gertz, Airbus * EOY 2013 ** Households with daily expenditures between $10 and $100 per person (at PPP)
3,740
2,356
5,375
North America
Europe
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Tourism stimulates economic and air transport growth
September 14
Source: World Tourism Organization, OAG, IHS Global Insight, Airbus
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0% 2% 4% 6% 8% 10% 12% 14%
International tourist arrivals (CAGR* 1995-2012)
Real GDP (CAGR* 1995-2012)
* Compound Annual Growth Rate
Economic growth catalyst
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0% 2% 4% 6% 8% 10% 12% 14%
International tourist arrivals (CAGR* 1995-2012)
ASKs (CAGR* 1995-2012)
Air transport growth catalyst
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Worldwide international arrivals by type of border crossing
58% 36% 5% 1%
45% 48%
5% 2%
Aviation, the first contributor to international tourist arrivals growth
0% 1% 2% 3% 4% 5% 6%
CAGR* 1995-2012 (%)
Road
Air
Sea
* Compound Annual Growth Rate Source: World Tourism Organization, Airbus
1995 2012
529 million tourists
Air Sea
Road
1,035 million tourists
Air Sea
Road
Rail
Rail
Rail 5.5%
4.1%
2.3%
1.5%
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Visiting friends and relatives is a key driver of traffic growth
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Source: UN WTO, UN DESA, Airbus
Origin
Page 43
Pacific
North America
Latin America
Europe/CIS
Asia/Middle East
Africa Destination
Immigration flow by region
27% …of all trips are for Visiting Friends and Relatives (VFR)
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International students have taken advantages of increased mobility
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1975 1980 1985 1990 1995 2000 2005 2009
International students (Thousands) International Students / World population ratio (Base 1 in 1975)
Source: OECD, UN Population Division, Airbus
Number of international students and share of World Population
Page 44
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Air transport growth is highest in expanding regions
Billions of people will increasingly want to travel by air
China India Middle East Asia Africa CIS Latin America Eastern Europe
Western Europe North America Japan
Yearly RPK growth 2014 - 2033
1 billion
people 2014
6.2 billion
people 2014
Em
ergi
ng/D
evel
opin
g A
dvan
ced
+6.0 %
+4.2 %
Page 45
September 14
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Air traffic will double in the next 15 years
Source: ICAO, Airbus GMF 2014
0
2
4
6
8
10
12
14
16
1973 1978 1983 1988 1993 1998 2003 2008 2013 2018 2023 2028 2033
World annual RPK* (trillion) Airbus GMF 2014
ICAO total traffic
4.7%
2013-2033
Page 46
September 14
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But we will face higher expectations and more competition
2013
Page 47
Safe
Sim
ple
Affordable
Eco-efficient G
row
th Fuel price
Competition
Reg
ulat
ions
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Future of Air Transport through uncertainties
2030 ATS -Presentation to FEAMA - YC - 18-05-10
Politics Environment
Economy
Air Transport
Energy
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Air Transport Scenario
2030 ATS -Presentation to FEAMA - YC - 18-05-10
Page 49
today 2030
Scared & Selfish
Mega Blocs
Turning Green
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© AIRBUS (Airbus S.A.S., Airbus Operations S.A.S., Airbus Operations GmbH, Airbus Operations LDT, Airbus Opeartions SL, Airbus China LTD, Airbus (Tianjin) Final Assembly Company LTD, Airbus (Tianjin) Delivery Centre LTD). All rights reserved. Confidential and proprietary document. This document and all information contained herein is the sole property of AIRBUS. No intellectual property rights are granted by the delivery of this document or the disclosure of its content. This document shall not be reproduced or disclosed to a third party without the express written consent of AIRBUS S.A.S. This document and its content shall not be used for any purpose other than that for which it is supplied. The statements made herein do not constitute an offer. They are based on the mentioned assumptions and are expressed in good faith. Where the supporting grounds for these statements are not shown, AIRBUS S.A.S. will be pleased to explain the basis thereof. AIRBUS, its logo, A300, A310, A318, A319, A320, A321, A330, A340, A350, A380, A400M are registered trademarks.
© AIRBUS (Airbus S.A.S., Airbus Operations S.A.S., Airbus Operations GmbH, Airbus Operations LDT, Airbus Opeartions SL, Airbus China LTD, Airbus (Tianjin) Final Assembly Company LTD, Airbus (Tianjin) Delivery Centre LTD). All rights reserved. Confidential and proprietary document. This document and all information contained herein is the sole property of AIRBUS. No intellectual property rights are granted by the delivery of this document or the disclosure of its content. This document shall not be reproduced or disclosed to a third party without the express written consent of AIRBUS S.A.S. This document and its content shall not be used for any purpose other than that for which it is supplied. The statements made herein do not constitute an offer. They are based on the mentioned assumptions and are expressed in good faith. Where the supporting grounds for these statements are not shown, AIRBUS S.A.S. will be pleased to explain the basis thereof. AIRBUS, its logo, A300, A310, A318, A319, A320, A321, A330, A340, A350, A380, A400M are registered trademarks.
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© 2014 IHS
IHS ECONOMICS & COUNTRY RISK
THE OUTLOOK TO 2040
Factors likely to drive change in the world economy
NOVEMBER 2014
Elisabeth Waelbroeck-Rocha, Chief International Economist [email protected] +336 07 21 12 20
© 2014 IHS
Multiple factors influence long term developments
• Demographic trends • Demographic growth, changing age pyramids, urbanisation, …
• Underlying structural trends, and the legacy of the past • In economic terms: sectoral composition of output, industrial organisation (clusters, large/small,
gazelles…), income distribution, wealth distribution,…
• How “resources” are preserved: education levels, …
• Regulatory structure: democracy, rule of law
• Technological progress, and the diffusion of innovation
• Changing face of finance
• What people will do / how they will behave – ie attitudes, values and strategies • Can vary across countries / role of culture
© 2014 IHS
Four families of stakeholders will influence tomorrow’s future
54
Governments Financial organisations
Non-financial organisations
Households
© 2014 IHS
The future will be defined by the interactions between these stakeholders and their environment
55
Governments Financial organisations
Non-financial organisations
Households
Economy Environment
Social Societal
© 2014 IHS
Progress is measured on several dimensions. The economic dimension is only one of them…
56
© 2014 IHS
Driving factors on the demographic front include
• Changing age pyramids
• Urbanisation patterns / hence increased risks from a security/health standpoint, and changed infrastructure needs ?
57
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970 2014 2040
80+
65-80
14-65
<14
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970 2014 2040
80+
65-80
14-65
<14
Advanced economies Emerging economies
© 2014 IHS
Demographic structures
58
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1970 1970 2014 2014 2040 2040
80+
65-80
14-65
<14
Advanced Economies
Emerging Economies
Advanced Economies
Emerging Economies
Advanced Economies
Emerging Economies
1970
2014
2040 Million
© 2014 IHS
Household’s behaviours/values will change
• Generational shifts
• Income (re-)distribution
• Attitudes / consequences of technological change and impact on behaviours and preferences
• Risk and perception of risk
59
© 2014 IHS
Globalisation is likely to take new forms
60
Protectionism and regional integrati
on Protectionism and regional integrati
on
Intangibles / shift in values
?
18-19th centuries
? ?
?
1900-30
1940-80 1990-2005
2005-14
Intangibles & Shift in consumer
values
Return to localised
prod systems
Global sourcing
to mitigate
risks
Regional integration
Protectionism
Localised production
Fordism
Trade liberalisation
ICT Revolution
Mass
customisation Clusters
1 2
3
4
© 2014 IHS
Technological progress will contribute to the change in globalisation patterns. A new revolution is in the making
61
1980
2005
2015 ?
© 2014 IHS
In past decades, trade has been an engine of world growth
62
-15
-10
-5
0
5
10
15
1980 1984 1988 1992 1996 2000 2004 2008 2012
Total exports of goods and services
GDP Real
World - Total Export vs Real GDP growth - in yoy, %
© 2014 IHS
It will continue to play a role in the future, but more limited
63
-15
-10
-5
0
5
10
15
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028 2032 2036 2040
Total exports of goods and services
GDP Real
World - Total Export vs Real GDP growth - in yoy, %
© 2014 IHS
The share of exports in world GDP will stabilise
64
0%
5%
10%
15%
20%
25%
30%
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028 2032 2036 2040 2044
World : Ratio Total exports to GDP (in %)
© 2014 IHS
The trend in FDI is another sign of the globalisation. Its future trend illustrates the changing form of globalisation
65
0
500
1000
1500
2000
2500
3000
3500
4000
2003
Q1
2003
Q3
2004
Q1
2004
Q3
2005
Q1
2005
Q3
2006
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q3
2011
Q1
2011
Q3
2012
Q1
2012
Q3
2013
Q1
2013
Q3
2014
Q1
2014
Q3
Inward FDI into China
Total outward FDI
© 2014 IHS
FDI growth will resume, but should not reach the pre-crisis peak
66
0
500
1000
1500
2000
2500
3000
3500
4000
2003
Q1
2004
Q3
2006
Q1
2007
Q3
2009
Q1
2010
Q3
2012
Q1
2013
Q3
2015
Q1
2016
Q3
2018
Q1
2019
Q3
2021
Q1
2022
Q3
2024
Q1
2025
Q3
2027
Q1
2028
Q3
2030
Q1
2031
Q3
2033
Q1
2034
Q3
2036
Q1
2037
Q3
2039
Q1
2040
Q3
© 2014 IHS
Financial market developments have largely contributed to global growth
67
0
50
100
150
200
250
1989
2014
Ratio of equity market capitalization to GDP for key markets
© 2014 IHS
Capital (53.8%)
ENEII (4.4%)
TFP (36.3%)
Labor (5.5%)
Forecast (2013-2040)
Productivity will be the main driver of growth in the advanced economies
68
Capital (54.3%)
ENEII (-1.6%)
TFP (43.8%)
Labor (3.5%)
History (1997-2012)
Capital (37.3%)
ENEII (-1.1%)
TFP (60.9%)
Labor (2.9%)
Forecast (2013-2040) Advanced Economies
Capital (52.7%)
ENEII (7.4%)
TFP (27.1%)
Labor (12.8%)
History (1997-2012) Major Emerging Markets
© 2014 IHS
These factors explain the different speed of growth across regions
69
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Africa Asia-Pacific CentralAmerica
SouthAmerica
NAFTA Europe EMU Middle East& North
Africa
1994-20142014-2040
Real GDP growth, %
© 2014 IHS
By 2040, 85% of the world’s economies will still have a real GDP per capita level below that of the US in 2000
70
0
1
2
3
4
5
6
Som
alia
Buru
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Mad
agas
car
Dem
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f Con
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Nor
th K
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Cote
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Mic
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Pale
stin
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Auth
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est o
f Mid
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East
and
Afr
ica
Nig
eria
Cam
bodi
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valu
Laos
Sam
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nam
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dova Fi
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dia
Arm
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Jam
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alva
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neBh
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Balti
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untr
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Esto
nia
Slov
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Wes
tern
Hem
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Spai
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wai
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ance
Wes
tern
Eur
ope
Ando
rra
Uni
ted
Arab
Em
irate
sG
erm
any
Aust
riaIc
elan
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ted
Stat
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land
Nor
way
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ar
Real GDP per capita in 2040 as a share of US real GDP per capita in 2000
© 2014 IHS
Number of countries with a real GDP per capita in 2040 below x% of the US real GDP per capita in 2000
71
0
20
40
60
80
100
120
140
160
180
200
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
© 2014 IHS 72
10 poorest and 10 wealthiest countries by 2040
• Lichtenstein
• Qatar
• Macau
• Luxemburg
• Bermuda
• Norway
• Singapore
• Switzerland
• Australia
• United States
• Somalia
• Guinea-Bissau
• Burundi
• Niger
• Madagascar
• Eritrea
• Democratic Republic of Congo
• Liberia
• Togo
• Central African Republic
© 2014 IHS
Risks of social disruptions abound …
73
One-year outlook for social/labour unrest
© 2014 IHS
Trend in the share of different countries/regions in real world GDP in selected years
74
0
5
10
15
20
25
30
2000
2014
2024
2040
%
© 2014 IHS 75
The Asia-Pacific region will account for half of the growth in world GDP in 2040
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2024 2040
Africa
Middle East
Latin America andCaribbeanAsia-Pacific excludingJapan and ChinaChina
Emerging Europe
Western Europe
Japan
Mexico
Canada
United States
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2014 2024 2040
Africa
Middle East
Latin America andCaribbeanAsia-Pacific excludingJapan and ChinaChina
Emerging Europe
Western Europe
Japan
Mexico
Canada
United States
Composition of world GDP by country/region Contribution of each country/region to the RISE in world GDP
© 2014 IHS
Conclusion
• Globalisation will take new forms going forward • Increased intra-regional focus • Focus on intangibles/value of services • Impact of manufacturing 4.0 on the location of production • Global sourcing to mitigate risks
• The Asia-Pacific region will continue to drive world growth
• Global world imbalances will persist: 85% of the world’s economies will still have a real GDP per capita level below that of the US in 2000: social disruptions could change the outlook
• Technological progress, geopolitical factors and demography will have at least as big a contribution as underlying economic developments going forward
76
© 2014 IHS
Global Outlook
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Thank you!
Elisabeth Waelbroeck-Rocha, Chief International Economist, +331 76 76 30 87, [email protected]
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