Global Economy and World Trade Nick Kounis Head Macro & Financial Markets Research Capital Link Greek Shipping Forum, Athens 24 February 2015
Worries about the global economy continue 2
The next leg of the euro crisis? 3
The Fed s exit another old worry 4
Not forgetting the Chinese debt mountain Total debt to GDP, % 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Consumer Central govt. Local govt. Companies Source: CICC, PBoC, ABN AMRO Group Economics
Even the fall in oil prices is being read as bad news! USD per barrel 130 120 110 100 90 80 70 60 50 40 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Source: Bloomberg 6
Reality more encouraging! World trade, %3mo3m ar 14 12 10 8 6 4 2 0-2 -4 11 12 13 14 Source: Thomson Reuters Datastream 7
The fall in oil prices is a big stimulus! Gain from USD 50 drop in oil prices, % GDP 3.0 2.5 2.0 1.5 1.0 0.5 0.0 IN JP ES ID CN DE FR IT US Source: ABN AMRO Group Economics, BP 8
Does this look like a deflationary spiral? Eurozone retail sales, % yoy 4.0 2.0 0.0-2.0-4.0-6.0 03 04 05 06 07 08 09 10 11 12 13 14 Source: Thomson Reuters Datastream 9
Joe Sixpack is back! US consumer confidence, Index 110 100 90 80 70 60 50 40 30 20 08 09 10 11 12 13 14 15 10 Source: Thomson Reuters Datastream
US labour market we have lift off! 3m mav, 000s % 400 200 0-200 -400-600 -800 04 05 06 07 08 09 10 11 12 13 14 10 9 8 7 6 5 4 Private sector employment (lhs) Unemployment rate (rhs) Source: Thomson Reuters Datastream 11
Advanced economy demand will boost EM % yoy 20 15 10 5 0-5 -10 1996 1998 2000 2002 2004 2006 2008 2010 2012 6 4 2 0-2 -4-6 Emerging market exports (lhs) OECD domestic demand (rhs) Source: Thomson Reuters Datastream, IMF 12
Asian economies will benefit Export exposure to US and eurozone, % GDP 35 30 25 20 15 10 5 0 HK VI SG MA TH KO CH PH IN IND US Eurozone Source: Thomson Reuters Datastream, ABN AMRO Group Economics 13
China: gradual slowdown, but need to do more Index % yoy 160 12 140 120 100 80 easier tighter 11 10 9 8 7 60 07 08 09 10 11 12 13 14 6 Monetary Conditions Index (lhs) GDP (rhs) Source: Bloomberg, ABN AMRO Group Economics 14
China: further easing ahead % yoy 10 8 6 4 2 0-2 08 09 10 11 12 13 14 Headline inflation Core inflation Benchmark policy rate Source: Thomson Reuters Datastream 15
Asia: a second powerhouse? Economic growth, % yoy 12 11 10 9 8 7 6 5 4 09 10 11 12 13 14 China India Source: Thomson Reuters Datastream 16
World trade has a high beta to world GDP % yoy ratio of % yoy growth rates 8 7 6 5 4 3 2 1 0 1997 1999 2001 2003 2005 2007 2009 2011 2013 3.0 2.5 2.0 1.5 1.0 0.5 0.0 World GDP (lhs) World trade/world GDP (rhs) Source: Thomson Reuters Datastream, ABN AMRO Group Economics 17
US economic growth during tightening cycles Quarters after rate hike expectations built 6 5 4 3 2 1 0 0 1 2 3 4 5 6 7 8 9 10 11 12 %qoq saar %yoy Source: Thomson Reuters Datastream 18
The wave of global liquidity: its not over yet!! Mario and Haruhiko taking over from Janet. Rebalancing via stronger dollar 19
Eurozone: signs of life in bank lending Net change in demand % yoy 40 20 0-20 -40-60 04 05 06 07 08 09 10 11 12 13 14 15 Credit demand (lhs, positive is higher) Annual growth in loans to non-fin. Corporations (rhs) 16 11 6 1-4 -9 Source: Thomson Reuters Datastream 20
Collapse in oil prices reflects oversupply Barrels of oil per day, mn 93 91 89 87 85 83 08 09 10 11 12 13 14 Oil demand Oil supply Source: IEA, ABN AMRO Group Economics 21
Despite all the noise Grexit is unlikely We did not even agree to disagree 22
The beginning of a beautiful friendship? Long-run deal 1.Less austerity 2. New reforms 3. Debt relief 23
Our views in numbers ABN AMRO forecasts for economy and financial markets Economic outlook 2014 2015 2016 Global GDP 3.2 3.7 3.9 US 2.4 3.8 3.0 Eurozone 0.9 1.6 2.2 China 7.4 7.0 7.0 World trade 3.0 5.5 6.0 Rates and FX (end of year) Spot 2015 2016 USD 3-M Libor rate 0.26 1.40 3.00 US 10-Y Treasury yield 2.10 2.10 2.90 EUR/USD 1.14 1.05 0.95 Oil prices (Brent USD/barrel) 60 65 75 Source: ABN AMRO Group Economics 24
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