Embed Size (px)
DESCRIPTION
Andrew Sentence’s presentation in Capital Markets Top Seminar 25.9.2014.
Citation preview
Rediscovering growth - afterthe crisis
Dr Andrew SentanceSenior Economic Adviser, PwC
Capital Markets Top SeminarAalto University, Helsinki, 25th September 2014
www.pwc.co.uk
PwC
Growth trends in the “New Normal”average % per annum GDP growth in major Western economies
Source: OECD *GDP-weighted
Slide 2
-0,5
0
0,5
1
1,5
2
2,5
3
3,5
41989-99 2000-07 2010-14
The new normal
PwC
Sluggish productivity across the WestGDP per person employed in major Western economies, 2006=100
Source: IMF World Economic Outlook, April 2014
90
95
100
105
110
115
120
2006 2007 2008 2009 2010 2011 2012 2013 2014
Canada Finland FranceGermany Italy NetherlandsSpain UK US
Slide 3The new normal
PwC
Pre-2007 growth drivers have been undermined
Sustainedgrowth
Easy money
Cheapimports
Confidencein policyregime
Slide 4The new normal
PwC
What is the “new normal”?
• 2007/8 marked the end of a long and sustainedexpansion in UK and other Western economies
• Conditions which supported this period of growth arenot set to return quickly
• Prolonged structural readjustment underway inresponse to financial crisis and East-West rebalancing
• Significant parallels with disappointing growth andvolatility of the 1970s and early 1980s
The new normalSlide 5
PwC
Two phases of the “new normal”
Current Phase:
Disappointing western growth to continue into mid-2010s
Financial volatility persists
High and fluctuating energy and commodity prices
New Growth Phase?
Clearer and more sustained growth dynamic emerges
Perhaps starting in the second half of this decade
Different set of growth drivers from pre-2007 long expansion
Some Western economies better placed than others
Businesses, policy-makers and investors need strategies tomanage and survive through current disappointing growth,while building potential opportunities for the future.
Slide 6The new normal
PwC
Business success in the “new normal”
Opportunities in Asia and emerging markets
Harnessing technology and innovation
Repositioning for structural and market change
Increasing business flexibility and adaptability
Efficient use of energy/resources
The new normalSlide 7
PwC
2014 Global Economic Weather Map
Source: PwC main scenario
Russia
Germany
UK
US
Brazil
India
Spain
Key
Canada
Mexico
South Africa
Australia
Japan
Italy
Greece
Ireland
France
2.2
2.3
2.6
1.8
0.9
0.9
1.7
3.0
2.0
0.1
1.8
5.3
0.3
2.6
7.4
1.5
0.5
x.x = GDP growth in 2014
China
Slide 8
PwC
Europe’s North-South divideUnemployment as % of labour force
Source – PwC calculations based on ILO standardised unemployment ratesThe new normal
Slide 9
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
N & E Europe (inc UK) S Europe & France United States
PwC
Policy agenda for growth
• Regional and global trade liberalisation
• Strengthening the supply-side of the economy
Effective competition and business regulation
Tax reform
Labour market flexibility and efficiency
Infrastructure, education/training and research
• Public sector restructuring and reform
• Orderly exit from monetary stimulus
The new normalSlide 10
More on Rediscovering Growth …
Email: [email protected]
Blogs: http://pwc.blogs.com/economics_in_business/ andhttp://andrewsentance.com/the-hawk-talks
Book: “Rediscovering growth: After the crisis”
Twitter: @asentance
This publication has been prepared for general guidance on matters of interest only, and doesnot constitute professional advice. You should not act upon the information contained in thispublication without obtaining specific professional advice. No representation or warranty(express or implied) is given as to the accuracy or completeness of the information containedin this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, itsmembers, employees and agents do not accept or assume any liability, responsibility or duty ofcare for any consequences of you or anyone else acting, or refraining to act, in reliance on theinformation contained in this publication or for any decision based on it.
© 2014 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers toPricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is amember firm of PricewaterhouseCoopers International Limited, each member firm of which is aseparate legal entity.
Design: ML3-2011-11-22-0836-NB
