2009 03 Free Global Summary Final

March 2009 BCM Global Summary


Summary

• Most OECD nations leading indicators are in DOWNTURN and declining

• The unemployment rate is rising globally, with the US and Spain leading

• Consumer confidence remains depressed

• The Allianz World Indicator continues to decline

• US, UK and Australian property prices are in decline

• Industrial production globally continues to collapse

Forecast

• Continued contraction of the economy throughout 2009

Table of Contents

2. Global Economic Map – OECD Composite Leading Indicator

3. Global Economic Map – OECD Harmonised Unemployment Rate

4. Global Economic Map – OECD Standardised Consumer Confidence

5. Global Economy – Allianz World Indicator

6. OECD CLI & Production – The World & North America

7. OECD CLI &Production – Major 4 Europe & Major 5 Asia

8. Global House Prices – US, UK, Australia & Perth, Australia

9. US Economy – OECD CLI/IP, S&P Case-Shiller House Price Index

10.US Consumer Debt, Payments, Credit and Consumption

11.European Economy – OECD CLI/IP and Unemployment

12.Stock Markets – Developed Nations

13.Stock Markets – Emerging Nations

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Korea’s OECD CLI is the first to enter recovery, perhaps as a sign of things to come. Alternatively, Brazil, Russia and China’s CLI

continue to declerate at a rapid pace indicating much further downside to CLI.

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Spain remains in employment strife with high and rapidly rising unemployment. The US is also deteriorating rapidly. Best

performaing are Japan, Korea and Germany.

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All OECD nations have below trend Consumer Confidence (<100). Germany and China have the largest decleration rates.


5Global Economy – Allianz World Indicator

The global monetary index recovered following interest rate cuts. However this is likely

remain offset by plunging soft indicators (sentiment, conditions survey) and hard

indicators (production, orders, sales, oil price). The current decline suggests there is

further for this series to fall.

The Allianz World Indicator continues to point south reaching its lowest level in

November. This indicates a world economy in recession at this time and likley to worsen

in the period ahead. The USA indicator was lowest at -2.2, followed by the world and

Japan at -1.9, and the Euro area at -1.5.

The Allianz World

Indicator…

…continues to decline

(unchanged for month)

Allianz Indicator:

Monetary, Hard and

Soft Sub-Indicies…

…deepened further in

November

(unchanged for month)


6OECD CLI & Production – The World & North America

The OECD NAFTA CLI and reference series continue to decline. The January CLI was 90.81,

down -1.24 for the month (previous month decline -1.46). The only positive here to note

is that the rate of decline of the CLI is slowing.

The OECD World CLI and reference series continue to decline. The January CLI was 91.31,


is that the rate of decline of the World CLI is slowing.

OECD World

Composite Leading

Indicator and

Industrial

Production…

…declining at an

accelerating pace

OECD NAFTA

Composite Leading

Indicator and

Industrial

Production…

…CLI and production

plunging


7OECD CLI &Production – Major 4 Europe & Major 5 Asia

The OECD world CLI and reference series continue to decline. The January CLI was 89.97,


is that the rate of decline of the CLI is slowing, though still remains very high.

The OECD MAJOR 4 EUROPE CLI and reference series continue to decline. The January CLI

was 94.14, down -0.53 for the month (previous month decline -0.69). The only positive

here to note is that the rate of decline of the CLI is slowing.

OECD Major Four

Europe Composite

Leading Indicator

and Industrial

Production…

…declining at an

accelerating pace

OECD Major Five

Asia Composite

Leading Indicator

and Industrial

Production…

… declining at an

accelerating pace


8Global House Prices – US, UK, Australia & Perth, Australia

Continued Declines in all markets, Australia just beginning downturn.

US, UK and Australian house prices are down 28.3%, 20.6% and 4.0% from their June

2006, October 2007 and March 2008 peaks. Prices are falling at 19%, 18% and 3% p.a.

respectively.

The US housing options market predicts further falls off around 15% into a late 2010.


9US Economy – OECD CLI/IP, S&P Case-Shiller House Price Index

Industrial production is simply collapsing, down ~6.6% yoy and declining at a rapid rate.

The unemployment rate is rising rapidly, currently at 8.1%. The rate of decline in

spending and production suggest much higher unemployment in the period ahead.

The OECD US CLI and reference series continue to decline. The January CLI was 90.12,


is that the rate of decline of the CLI is slowing.

OECD US

Composite

Leading Indicator

& Industrial

Production …

…declining sharply

US Production and

Unemployment …

… falling and rising still


10US Consumer Debt, Payments, GDP and Consumption

At the 2006 peak, consumers expanded debt (red line) by US $1.4 trillion annualised,

nearly 10% of US GDP. Without the support of new consumer debt (nearing zero), GDP

(blue) and consumption (green) are falling sharply.

This one chart explains much. Not since 1980 has consumer debt failed to expanded at

less than 3.8%, until now (2.4%). US consumers are on a debt-diet, likely due to excessive

debt service payments (14% of disposable income). This is a global phenomenon.

US Consumer Debt

and Debt Payments

…unwinding debt at a

historical rate

US GDP, Consumer

Debt and

Consumption…

…as consumer goes, so

goes the economy, and

the global economy…


11European Economy – OECD CLI/IP and Unemployment

Euro unemployment rate rose to 8.2 in January from 8.0 in December consistent with

falling production. Given the strong cyclical nature of unemployment during the business

cycle, we can expect to see higher unemployment in the months ahead.

The OECD EURO AREA CLI and reference series continue to decline. The January CLI was

93.68, down -0.65 for the month (previous month decline -0.83). The only positive here

to note is that the rate of decline of the CLI is slowing.

Euro Unemployment

Rate…

…upward trend

OECD Euro Area

Composite

Leading Indicator

& Industrial

Production …

…declining sharply

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sGlobal markets appear range bound having declined 30-60% in price due to the global recession. The

coordinated price movements of developed indexes is clearly evident in this chart.

The index covers the US (^GSPC), Japan (^N225), UK (^FTSE), Germany (^GDAXI), France (^FCHI), Australia (^AORD),

Canada (^SPTSE), Spain (^SMSI), and Italy (^SPMIB).

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sEmerging markets remain coupled to developed markets. It is unlikely that emerging markets can

advance until western consumer economies (their export markets) recover.

The index covers Brazil (^BVSP), Russia (^RTS.RS) and India (^BSESN), China (^HSI). The US (^GSPC) is provided as a

reference series to enable a comparison with developed markets above.


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Business-Cycle Information. This summary should be read in conjunction with the

BCM Business Cycle Supplement to provide additional information on how the

business cycles functions.

Description and References. Additional information on these indicators, global maps,

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Economy & Finance

2009 03 Free Global Summary Final