World real GDP growth in 2010 Annual percent change

Transcription

1 World real GDP growth in 20 Annual percent change % or more 6-% 3-6% 0-3% Less than 0% No data Source: International Monetary Fund.

2 World real GDP growth in 2011 Annual percent change % or more 6-% 3-6% 0-3% Less than 0% No data Source: International Monetary Fund.

3 Solid recovery World real GDP grew by 5 percent in 20 Real GDP growth, percent Emerging and developing economies Advanced economies World Source: World Economic Outlook, International Monetary Fund, April 2011 update.

4 World output forecasts Percent change from previous year F 2012F World Advanced economies United States Japan United Kingdom Euro area Emerging and developing economies Brazil China India Russia Source: World Economic Outlook, International Monetary Fund, April

5 Inflation risk ahead? Percent change in consumer prices (year-to-year) Percent Emerging and developing economies Advanced economies World Source: World Economic Outlook, International Monetary Fund, April 20 update.

6 Inflation pressure rising in emerging countries % change in consumer price index, 3-month rolling average 18 Russia 16 India Brazil 6 4 China Source: OECD, Milken Institute.

7 Inflation pressure rising in emerging countries % change in consumer price index, 3-month rolling average 18 Russia 16 India Brazil 6 4 China Source: OECD, Milken Institute.

8 Emerging countries have tightened monetary policy in fear of inflation Target interest rates of central banks Policy interest rates, percent India Brazil 8 6 China 4 2 India Source: Bloomberg.

9 Implied volatility: U.S. vs. emerging markets Implied volatility, percent JPMorganEmerging MarketVolatility Index (VXY) Chicago Board Options Exchange Volatility Index (VIX) Source: Bloomberg.

10 End of the era of cheap capital? Consensus forecasts: Central bank rates will increase in the next 12 months Percent Percent 2.5 Eurozone 14.0 Brazil U.K..0 Russia China 0.5 U.S. 4.0 India 0.0 Q1 Q2 Q3 Q4 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q Q1 Q2 Q3 Q4 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Source: Bloomberg.

11 Global imbalances on the rise again Projections after 20 Percent of world GDP U.S. China Emerging Asia Oil exporting countries Rest of world Sources: International Monetary Fund, Milken Institute. Note: Discrepancies are not plotted.

12 Performance of emerging bond markets Total return of JPMorgan EMBI Global indexes Annualized total return, percent Middle East Asia Latin America to Q Europe Africa 16.7 Sources: DataStream, Milken Institute.

13 The persistence of sovereign defaults Sovereign defaults in selected countries, 1824 to 2008 Argentina Ecuador Paraguay Uruguay Venezuela s Sources: Sturzenegger and Zettelmayer (2006), Moody s, Milken Institute.

14 A map for world sovereign defaults

15 Sovereign debt most likely to default in five years As of Q Rank Country Five-year cumulative probability of default (%) Rank Country Five-year cumulative probability of default (%) 1 Greece Ukraine Venezuela Dubai Ireland Lebanon Portugal Iraq 21.1 Source: CMA Global Sovereign Credit Risk Report. 5Note: Ranked Argentina by five-year cumulative probability of default Egypt 21.1

16 Capital raised: Developing Asia attracts the most funding after the crisis Middle East and North Africa 14% Sub- Saharan Africa 4% Europe 31% Middle East and North Africa % Sub- Saharan Africa 3% 20 Developing Asia 45% Europe 19% Western Hemisphere 24% Developing Asia 27% Western Hemisphere 23% Source: International Monetary Fund.

17 Emerging markets: Equity markets have returned to pre-crisis level US$ index, 2007=0 125 Emerging Asia Eastern Europe Latin America Source: Bloomberg.

18 Emerging market bond yield spreads As of April 8, 2011 Percent Sources: Bloomberg, Milken Institute.

19 The education gap across regions Population with no schooling, percent of population age 15 and over Advanced countries Developing countries Middle East and North Africa Sub-Saharan Africa 45.9 Latin America East Asia and the Pacific South Asia Europe and Central Asia Source: Robert Barro and Jong-Wha Lee (20).

20 Average years of schooling increased dramatically for developing countries in the past 60 years Average years of schooling Advanced countries 2.05 Developing countries Middle East and North Africa Sub-Saharan Africa 2.57 Latin America East Asia and the Pacific South Asia Europe and Central Asia Source: Robert Barro and Jong-Wha Lee (20).

21 Return on human capital Rate of return on an additional year of schooling, percent 14% 12% % 8% 6% 12.1% 13.3% 7.8% 6.6% 6.5%.3% 11.3% 8.5% 4% 2% 0% World Advanced countries Middle East and North Africa Sub-Saharan Africa Latin America East Asia and the Pacific South Asia Europe and Central Asia Source: Robert Barro and Jong-Wha Lee (20).

22 Investment rates have increased across all emerging market regions since 2000 Investment, percent of GDP Africa n.a Eastern Europe Latin America Emerging Asia excluding China and India n.a China India Other emerging countries Source: McKinsey Global Institute.

23 Emerging countries vs. developed countries Investment in infrastructure as a share of GDP, nominal values % GDP Emerging economies Developed economies Transportation Transportation Utilities Utilities Telecom Telecom Total infrastructure Total infrastructure Source: McKinsey Global Institute; McKinsey Global Economic Growth Database.

24 Ruben Vardanian slides

25 Population growth Percent 2.0% 1.5% 1.0% 0.5% India Brazil China 0.0% -0.5% -1.0% E Russia Source: CIA 20 World Factbook.

26 Birth and death rates Pro mille 25 Death rate Birth rate 5 0 Brazil India China Russia Source: CIA 20 World Factbook.

27 Life expectancy Years China Brazil India Russia Source: CIA 20 World Factbook

28 Literacy Percent Russia 99.40% China Brazil India Source: CIA 20 World Factbook. 0% 20% 40% 60% 80% 0%

29 Ranking Quality of management schools Benchmark 20 QATAR Source: Global Competitiveness Report India China Brazil Russia

30 Ranking Brain drain Benchmark SWITZERLAND India China Brazil Russia Source: Global Competitiveness Report

31 Ranking Corporate spending on R&D Benchmark 20 SWEDEN China 25 Brazil India Russia Source: Global Competitiveness Report

32 Government spending on R&D Percent of GDP 4% 3% 2% 1% 1.1% 0% Source: OECD, 20.

33 Peter Dattels slides

34 The two-speed global recovery posses challenges Average projected real GDP growth during (percent) less than 0 0 to 3 3 to 6 more than 6 no data 4.3 Source: International Monetary Fund.

35 Will capital flowing into EMs create imbalances? Z score Asian crisis Russia crisis Capital flows Real credit Real equity prices Start of global financial crisis Lehman collapse Source: International Monetary Fund.

36 EM banks expand lending while corporates releverage Real credit and GDP growth (2008-, in percent) Real credit growth Real GDP growth BRIC Countries: Debt-to-Equity Ratios of the Corporate Sector (2005 = 0, Russia on right scale) Brazil: a) 182, b) 60 India: a)6, b) 21 Russia: a) 54, b) 21 China: a)8, b) Source: International Monetary Fund a) D/E ratio 20, in percent b) D/E ratio 20, percentage points above average e 0 50

37 EM monetary policy: Falling behind the curve? Emerging Economies (percent of potential GDP) projected output gap Country flags represent the real policy rate* South Africa Russia Mexico Indonesia Chile India Brazil Malaysia China Source: International Monetary Fund. *Real policy rate is defined as current policy rate (Mar. 2011) minus 1-year ahead consensus inflation expectation normalized by its 5-year average (2005-); percentage points.

38 Rebalancing the policy mix between AEs an EMs Advanced Economies More structural policies needed -- > Cleaning Banks: Mainly in Europe Transparency, Capital, Restructuring/Resolution Sovereigns: Most AEs Fiscal consolidation Households: Mainly in U.S., some European Reducing debt burdens Emerging Markets More macroeconomic policies needed -- > Leaning Limit overheating and buildup of financial risks: Tighten macro policies Use macro prudential/capital flow measures Absorb/channel inflows: Broaden and deepen local capital markets

39 Rebalancing the policy mix between AEs an EMs Advanced Economies More structural policies needed -- > -- Legacy > Cleaning issues Banks: Mainly in Europe Transparency, Capital, Restructuring/Resolution Sovereigns: Most AEs Fiscal consolidation Households: Mainly in U.S., some European Reducing debt burdens Emerging Markets More More macroeconomic policies needed needed -- > Cyclical/growth -- > Leaning challenges Limit overheating and buildup of financial risks: Tighten macro policies Use macro prudential/capital flow measures Absorb/channel inflows: Broaden and deepen local capital markets