Thoughts on the global economy

Transcription

1 Thoughts on the global economy April 2017 Ian Stewart, Chief Economist, Deloitte LLP, London 2017 Global Equity Organization Page 1

2 Leading indicators signal stronger growth ahead Global Equity Organization Page 2

3 Global growth nudges up in 2017, but not back to pre-crisis rates Real GDP growth (% YoY)* Pre- Crisis Post- Crisis World Advanced Emerging *Pre-crisis = , Post-crisis = , Forecasts for 2017, 2018 Source: IMF World Economic Outlook, April Global Equity Organization Page 3

4 Why has growth been so weak: when bubbles burst growth suffers Over the last 120 years crises have been followed by a downturn lasting on average 2 to 3 years and costing 5 to 10% of GDP Eichengreen and Bordo, December 2000 Crisis Dates Duration Change in GDP Change in bank lending US Great depression Japan s lost decade Finland s banking crisis Source: Deloitte Research Global Equity Organization Page 4

5 Growth potential of Western economies falling Growth forecasts: 6-10 years ahead Global Equity Organization Page 5

6 UK: millennials incomes no better than Gen X s Global Equity Organization Page 6

7 Financial crisis has squeezed those in work Global Equity Organization Page 7

8 Shocking increase in mortality among middle age Americans Global Equity Organization Page 8

9 Free trade needs re-booting Global Equity Organization Page 9

10 Ageing populations Global Equity Organization Page 10

11 Declining workforce participation = slower growth Global Equity Organization Page 11

12 Job insecurity Global Equity Organization Page 12

13 Is innovation is no longer moving the dial on growth? vs Global Equity Organization Page 13

14 Creative destruction drives prosperity Global Equity Organization Page 14

15 Innovation drives down prices Global Equity Organization Page 15

16 More computer power for your money Global Equity Organization Page 16

17 Technology replaces human muscle power = fewer jobs, higher productivity Global Equity Organization Page 17

18 Less spent on essentials, more spending elsewhere Global Equity Organization Page 18

19 Productivity raises living standards = more spending on luxuries Global Equity Organization Page 19

20 Jobs in knowledge-intensive sectors rise Global Equity Organization Page 20

21 Human desires unpredictable Global Equity Organization Page 21

22 Conventional measures of GDP struggle to capture these benefits Global Equity Organization Page 22

23 Is the world really getting worse? Deloitte Deloitte Economics & Markets & Markets Team Team Global Equity Organization Page 23

24 World population living in extreme poverty Defined as consumption/income < $1.90 per day adjusted for inflation Global Equity Organization Page 24

25 Long squeeze on labour s share of GDP coming to an end? Global Equity Organization Page 25

26 Working long hours doesn t make you productive or rich GDP per head Hours worked per year Global Equity Organization Page 26

27 Conclusions Global growth accelerating Upturn in emerging and developed markets Trend growth rates can be raised Increase workforce participation Re-boot global trade Invest and innovate Improve regulation, open markets, sharpen incentives Measure better Global Equity Organization Page 27