Global risks and challenges of the world economy

Transcription

1 FINANCE A VÝKONNOST FIRIEM VO VEDE, VYUCE A PRAXE Global risks and challenges of the world economy Univerzita Tomáše Bati ve Zline Fakulta mamagementu a ekonomiky Medzinarodní vedecká konference apríla 2015 Juraj Sipko

2 Introduction Global risks World economic outlook Fiscal, financial and social stability Geopolitical risk Challenges

3 Global risks

4 Slowing Chinese Economy Liquidity / credit crunch Asset price collapse Retrenchment from globalization Global imbalances and currency volatility Extreme consumer price volatility Extreme commodity price volatility Infectious diseases Chronic diseases Demographic challenges Water security Air pollution Extreme energy price volatility Economic disparity Climate change Migration Food security Fiscal crises Flooding Regulatory failures Threats from new technologies Biodiversity loss Illicit trade Fragile stress Terrorism Geopolitical conflict Corruption Organized crime Global governance failures Weapons of mass destruction Ocean governance Space security Critical information infrastructure breakdown Infrastructure fragility Online data and information security Storms and cyclones Earthquakes and volcanic eruptions Source: World Economic Forum, 2013

5 World Economic Outlook

6 World Economic Outlook (%) Advanced economies Emerging market and developing economies World trade volume (goods and services) Source: World Economic Outlook, April 2015

7 7 G7 Current account of PB (% GDP) France Great Britain Italy Canada USA Japan Germany Source: Bloomberg, Haver Analytics, IMF, EC, OECD

8 8 BRICS Current account (% GDP) Brazil India South Africa China RF Source: Bloomberg, Haver Analytics, IMF, EC, OECD

9 G7 Savings and investments (% GDP) Average Average Average Savings Investments Source: Bloomberg, Haver Analytics, IMF, EC, OECD

10 EMCs Savings and investments (% GDP) Average Average Average Savings Investments Source: Bloomberg, Haver Analytics, IMF, EC, OECD

11 Global foreign exchange reserves (March 2015 thousands of USD) 11 Industrial countries $ Emerging markets $ Source: Bloomberg, Haver Analytics, IMF, EC, OECD

12 12 G7 Foreign exchange reserves (March 2015 thousands of USD) Italy Germany France USA Great Britain Canada Japan Source: Bloomberg, Haver Analytics, IMF, EC, OECD

13 BRICS Foreign exchange reserves (March 2015 thousands of USD) 13 South Africa $ Brazil $ RF $ India $ China $ Source: Bloomberg, Haver Analytics, IMF, EC, OECD

14 14 Growing role of renminbi #5 #8 #14 Dec 2012 Feb 2013 Apr 2013 Jun 2013 Aug 2013 Oct 2013 Dec 2013 Feb 2014 Apr 2014 Jun 2014 Aug 2014 Oct 2014 Dec 2014 JPY CNY CAD AUD CHF HKD SGD Source: SWIFT, March 2015

15 Imperative for world economy? Financial stability Fiscal stability Social stability Geopolitical risks Sustainable and balanced economic growth Source: IMF

16 Fiscal, financial and social stability

17 Sectoral composition of debt 2008 (% of GDP) Financial institutions Households Non-financial institutions Government Source: McKinsey Global Institute analysis, Bloomberg, Haver Analytics, IMF, EC, OECD

18 Total debt Cummulative GDP (%) USD +57 trillion 40 Households USD +55 trillion Corporate Government Financial sector Q Total debt (% GDP) Source: Haver analytics; National Sources; World Economic Outlook, IMF; BIS; McKinsey Global Institute analysis

19 Chinese debt Debt-to-GDP ratio (%) Government Financial institutions 125 Non-financial corporate Households Total debt (USD trillion) Source: MGI Country Debt database; McKinsey Global Institute analysis

20 Greece? 20

21 Amount owed (EUR billions) 21 Who the Greek debt is owed to (end of 2014) , , IMF EU ECB Other Total Source: World Economic Outlook, April 2015

22 30 Greek s debt repayment timetable (Annual, EUR billions) 25 EFSF Eurozone governments EIB 20 ECB Private investors IMF Treasury bill holders Source: Greece s Public Debt Management Agency, IMF, the Irish Statute Book, EC, 2015

23 Public Debt (% of GDP) General government gross debt ( ) Czech Estonia Germany Greece Iceland Ireland Italy Japan Portugal Slovak Republic Republic Spain United States Source: World Economic Outlook, April 2015

24 Primary balance (% of GDP) General government overall balance ( ) CZ EE DE GR IS IE IT JP PT SK ES US Source: World Economic Outlook, April 2015

25 Fiscal, financial and social stability

26 Global Financial Stability Emerging market risks Risks Credit risks April 2009 April 2010 April 2015 Macroeconomic risks Market and liquidity risks Monetary and financial Conditions Risk appetite Source: IMF

27 27 Exchange rate instability Bilateral exchange rate vs USD Real effective exchange rate Russia Brazil Colombia Turkey Mexico Malaysia Chile South Africa Indonesia India China Source: OECD, April 2015

28 Growing role of financial derivatives (USD billion) 28 Source: Bank for International Settlements, 2015

29 Growing role of shadow banking 29 Source: Bank for International Settlements, 2015

30 Fiscal, financial and social stability

31 Thomas Piketty Capital in the 21 st Century

32 Income inequality (last 30 years) The dramatic increase in recent decades in the share of income going to the top 1 percent in many countries is due to a partial restoration of capital incomes and, more significantly, to very large increases in compensation for top executives Source: IMF, 2014

33 Executive pay versus income inequality Rising executive pay and a partial restoration of capital income behind increasing income inequality Source: IMF, 2014

34 Income inequality

35 Causes of social instability Social disturbance Riots Strikes Protests Inceased crime

36 Geopolitical risks

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38 Challenges

39 Minulosť a budúcnosť

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41 Risks of world economy (1) USA exit challenges Advanced economies Euro area Deflation, low inflation Japan Beyond the initial impulse Rebalancing AEs, EMEs Geopolitical risks? Source: IMF

42 Advanced economies policies (2) USA Credible fiscal consolidation plan Monetary policy restrictive monetary policy Eurozone Complete and implement regulatory reform Banking union Structural reforms Japan Credible medium-term fiscal consolidation plan Structural reforms Source: IMF

43 EMEs policies (3) Fiscal and monetary policies Fiscal Tightening Stronger monetary policy framework Structural reforms Addresses bottlenecks in infrastructure Reform fuel price subsidies Exchange rate Intervene in FOREX only if liquidity isues arise Enhance resilience with prudential policies (corporate leverage, fragile currency exposure) Source: IMF

44 Collective action (4) Global Growth and Stability Restoring confidence Global economy - uneven and uncertain Decisive action needed to adress crisis legacy and global imbalances - both Sustainable and balanced growth Increasing vigilance against external shocks Medium-term consolidation, structural reform, and balancing are necessary complements to short-term action Reducing geopolitical risks Collaborative action of all participants required Source: IMF

45 Thank you for your attention

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