cautious optimism for a new era of global growth...2015 q1 2015 q2 2015 q3 2015 q4 2016 q1 2016 q2...
TRANSCRIPT
Cautious Optimism For a New Era of Global GrowthMAPI Foundation Webinar on the Global Economic Outlook
August 29, 2017 Cliff WaldmanChief Economist
• Growing signs of a coordinated but modest global growth improvement.
• The falling dollar adds a tailwind for U.S. manufacturing at a time of global economic strengthening.
• The MAPI Foundation baseline forecast is for an average of 1.7% • U.S. Manufacturing Growth from 2017-2020. • While modest, this is a meaningful acceleration from the nearly stagnant 2013-2016
period.
• U.S. political/policy shocks, Brexit uncertainty, and the confrontation with North Korea are the principle risks to the U.S. manufacturing outlook. The impact of the hurricane Harvey will take some time to assess but will vary by subsector.
• Population shifts that will catalyze changes in global labor supply and urbanization as well as the rise of Africa will govern global manufacturing developments in the decades to come.
Key Takeaways
• A fundamental turn in the world
• Advanced economies generally surprise to the upside
• Mixed data from China but the rebound persists
• Developing economies stabilize
• Global manufacturing forecasts
• U.S. manufacturing: modest improvement in the cards
• The outlook from 30,000 feet
• Looking far ahead: What will shape the world in the coming decades?
Today’s Presentation
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Perc
ent (
Year
/Yea
r)
Japan Eurozone United Kingdom
Consumer Price Inflation: Japan, the Eurozone, and the UK
Source(s): IHS Global Insight, and United Kingdom Central Statistics Organization (year/year for China and the Eurozone, annual percent rate for the UK)
Central Bankers Breathe Easier: Deflation Risks Abate
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(F)
2018(F)
Perc
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Expectations Grow For An Improved Global Outlook
World GDP Growth
F=ForecastSource(s): International Monetary Fund
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1
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6
2014
Q1
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Annu
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In a Switch, the U.S. Economy Becomes a Global Risk Spot Due To Political, Policy, and Geopolitical Strains
U.S. GDP Growth, Inflation-Adjusted, Seasonally Adjusted
Source(s): U.S. Commerce Department, Bureau of Economic Analysis
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Index March 1973=100
Inde
x: J
anua
ry 1
997=
100
Broad nominal dollar Dollar vs. major currencies
U.S. Broad Nominal Dollar and Dollar Versus Major Currencies
Source(s): Federal Reserve Board
The Resulting Dollar Reversal Grows as an Outlook Issue
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Perc
ent
United Kingdom Eurozone
As Brexit Looms, Improving Growth in the Eurozone, Slowing Growth in the U.K.
Eurozone and UK Real GDP Growth, Year-Over-Year
Source(s): United Kingdom Central Statistical Office
Eurozone Manufacturing Production, Year-Over-Year Growth
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Source(s): Eurostat
Improvement For Eurozone Manufacturing
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At Long Last, Japan Finds Consistent Growth
Japan, Real GDP Growth, Seasonally Adjusted at Annual Rate
Source(s): Economic and Social Research Institute
Japan, Manufacturing Output Growth, Year-Over-Year Percent Change
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Perc
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Source(s): Bank of Japan
Japanese Manufacturing Growth On the Upswing
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Perc
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Encouraging Signs for Canada as Global Commodity Markets Firm
Canada Real GDP Growth, Seasonally Adjusted at Annual Rate
Source(s): Statistics Canada
China’s Annual GDP Growth
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4
6
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12
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16
2003
2005
2007
2009
2011
2013
2015
Perc
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Source(s): National Bureau of Statistics of China
China’s Slowdown: It’s Over!
China’s Total Export and Total Import Growth
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100
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(Yea
r/Yea
r)
Exports Imports
Source(s): China Statistical Information and Consultancy Service Center
Positive Growth in China Trade Resumes
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Year
to D
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Perc
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hang
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ear/Y
ear)
China’s Fixed Asset Investment, Purchase of Equipment and Tools
Source(s): National Bureau of Statistics of China
Dodging the Bullet on a China Investment Contraction
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Perc
ent (
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/Yea
r)
China’s Growth of Industrial Value-Added
Source(s): National Bureau of Statistics of China
The Chinese Manufacturing Slowdown Has Reached a Bottom
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Stabilization in Troubled Emerging Markets
Brazil’s Real GDP Growth
Source(s): IHS Global Insight
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Perc
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As Commodity Prices Firm, Russia Finds Stability
Russia’s Real GDP Growth, Year Over Year
Source(s): IHS Global Insight
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Unfortunately, Emerging Weakness in India Prevents a Manufacturing Recovery
India, Manufacturing Production Growth, Year-Over-Year
Source(s): Reserve Bank of India
Mexico, Growth of Total Export Demand
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Perc
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/Yea
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Source(s): National Institute of Statistics and IHS Global Insight
Significant Export Improvement In Mexico, A Good Sign for North America
Mexico Manufacturing Production Growth, Year-Over-Year
Stronger Manufacturing Growth Could Lead the Way to Stronger Economic Growth in Mexico
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Perc
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Source(s): National Institute of Statistics and IHS Global Insight
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World
United Kingdom
Eurozone
Japan
China
Asia, ex Japan
Brazil
Mexico
Perc
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2017 2018
On the Whole, A Mixed But Improving Picture for Global Manufacturing Growth
Select Economies, Forecast of Manufacturing/Industrial Production Growth
Source(s): Consensus Forecasts and MAPI Foundation
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Perc
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U.S. Manufacturing Growth Strengthens as An Improving Global Economy and a Falling Dollar Spur Factory Activity
U.S. Manufacturing Production Growth, Annual Percent Change, Seasonally Adjusted
Source(s): Federal Reserve Board
Purchasing Managers’ Index for U.S., Manufacturing
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Perc
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Source(s): Institute for Supply Management
The Purchasing Managers’ Index Has Generally Transmitted Optimistic Signals About Better Days for U.S. Manufacturing
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Hints of Stronger U.S. Export Demand From a More Stable World
U.S. Total Export Growth, Annual Rate, Seasonally Adjusted
Source(s): U.S. Bureau of Economic Analysis
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Modest Firming in U.S. Equipment Investment as Global Risks Abate
U.S. Equipment Expenditure Growth, Annual Rate, Seasonally Adjusted
Source(s): U.S. Bureau of Economic Analysis
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(F)
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(F)
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(F)
Perc
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MAPI Foundation Forecast: The Era of Moderate Economic Growth Continues in the U.S.
U.S. GDP Growth, Inflation-Adjusted
F=ForecastSource(s): U.S. Bureau of Economic Analysis and MAPI Foundation
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2015
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(F)
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(F)
Annu
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hang
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Exports Business Equipment Investment
MAPI Foundation Forecast: Modest Outlook for the Drivers of Manufacturing Activity
U.S. Manufacturing Production Growth
F=ForecastSource(s): MAPI Foundation
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(F)
Annu
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hang
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MAPI Foundation Manufacturing Forecast: Better But Still Slow
U.S. Manufacturing Production Growth
F=ForecastSource(s): Federal Reserve Board and MAPI Foundation
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1.4
1.6
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2.2
2.4
Basline Dollar Scenario Bearish Dollar Scenario
Perc
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U.S. Manufacturing Forecast, Alternative Dollar Scenarios, Projected Average of U.S. Manufacturing Growth for 2017-2020
Source(s): MAPI Foundation
Upside Risk to U.S. Manufacturing Growth From a More Protracted Fall in the Dollar
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Basline Pessimistic Optimistic
Perc
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Non-U.S. Advanced Country GDP Developing Country GDP U.S. Manufacturng Growth
U.S. Manufacturing Forecast, Alternative Global Growth Scenarios, Projected Average of U.S. Manufacturing Growth for 2017-2020
Source(s): MAPI Foundation
U.S. Political/Policy Risk and Geopolitical Tensions Guide the Pessimistic Growth Scenario. A Strong Coordinated Global Upturn Guides the Optimistic Outcome.
• Growing signs of coordinated but modest global growth improvement.
• The falling dollar adds a tailwind for U.S. manufacturing at a time of global economic strengthening.
• The MAPI forecast remains for a modest improvement in U.S. manufacturing growth over the nearly stagnant 2013-2016 period.
• Political/Policy shocks, Brexit uncertainty, and the confrontation with North Korea are the principle risks to the U.S. manufacturing outlook.
The Outlook From 30,000 Feet
• Labor Supply: The shift from a labor rich to labor scarce global economy.
• Urbanization: Population concentration creates spatial scarcities, reshapes supply chains, alters household structures, and impacts the composition of goods demand.
• Africa’s Promise: Favorable demographics and accelerating economic growth shed sunlight on a difficult continent. But it’s a diversified and nuanced story of winners and losers.
Shaping the World in the Decades to Come
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70
1975
1980
1985
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1995
2000
2005
2010
2015
2020
(F)
Perc
ent
World Less Developed More Developed
Labor Supply Becomes a Worldwide Challenge
Share of World, More Developed, and Less Developed Populations in theAged 15-64 Cohort
F=ForecastSource(s): United Nations, World Population Prospects, 2017 Revision
0
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60
70
80
90
1950
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1990
2010
2030
(F)
2050
(F)
Perc
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World More Developed Regions Less Developed Regions
Share of Population Residing in Urban Areas: World and Major Divisions
Source(s): United Nations, Department of Economic and Social Affairs, World UrbanizationProspects, 2014 Revision
As Population Growth Slows and as Populations Age, They Appear to Concentrate
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(F)
Perc
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World Emerging market and developing economies Sub-Saharan Africa
Economic Growth Shows Promise Even in the Poorest Region of Africa
Real GDP Growth
F = ForecastSource(s): International Monetary Fund
Questions, Anyone?