web conference: european and african economic outlook 2013
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European and African Economic OutlookEuropean and African Economic Outlook
Gaining Momentum in 2013: When will the regional growth Gaining Momentum in 2013: When will the regional growth engines ignite?engines ignite?
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Q&A Regional Trends: Europe
3
Regional Trends: Europe
€€ €
1EURO
4
Vinnie Aggarwal
Chief Economist
€€€
High Hopes for the Future?
5
Sink or Swim?Many European Emerging Markets Have Performed Well in 2013 Despite Challenges
1.0
1.5
2.0
2.5
3.0
GD
P G
row
th (
%)
GDP Growth Comparison - Emerging and Continental Europe 2012-2014
GDP Growth Through Recessionary Periods, Continental Europe, Three Year Comparison
-6.0
-4.5
-3.0
-1.5
0.0
1.5
3.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
GD
P G
row
th (
%)
2008 2009 2010
6
-1.0
-0.5
0.0
0.5
1.0
2012 2013 2014
GD
P G
row
th (
%)
Emerging Europe Continental Europe-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
GD
P G
row
th (
%)
2012 Financial Crisis2009 Recession
Longer period of downturn and longer period to recovery expected
Sources: GET-IT and Frost & Sullivan
2011 2012 2013
Pockets of Economic Growth will Move Europe Forward
Pockets of Growth in Europe, 2013 and 2014
Western EuropeAutomotive sales are up for the first time in
19 months, led by Germany and UK
Eastern EuropeSignificant investment in
energy projects
7
Even though economic growth prospects have been downgraded for Europe there are still regions and industries where innovation or investment will drive development
Sources: GET-IT and Frost & Sullivan
TurkeyEuropean growth
engine
RomaniaLocal automotive industry focus on budget cars will
appeal to emerging markets
Regional Trends: Europe (United Kingdom)
₤₤ ₤
8
Gary Jeffery
Partner & Director, Europe
₤₤₤
Gaining Momentum, with Recovery in SightProspects look positive for future growth in energy and chemicals. GDP set to show positive growth in 2013.
GDP Growth to Remain Modest in 2013
•GDP growth picking up with average of 0.5% growth expected for 2013
•Consumer confidence grows as new car sales expected to average 3.0 per cent growth in 2013
1.0
1.2
1.4
1.6
GD
P G
row
th (
y/y
%)
9
Sources: GET-IT and Frost & Sullivan
•The UK is expected to be one of the top 5 destinations for investment in the next 2 years
• Inflation prospects are down, but no further central bank quantitative easing expected in 2013
• Increased tax revenue will give additional fiscal support 0.0
0.2
0.4
0.6
0.8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
GD
P G
row
th (
y/y
%)
2011 2012 2013
Could Shale Gas Potentially Deliver Much Needed Stimulus to the UK’s Manufacturing Sector?
•Coal prices decrease, changing electricity supply mix and will lead to increased carbon costs in the short-term
•Renewable energy requirements to raise wholesale electricity price
6,000
8,000
10,000
12,000
14,000
Natu
ral G
as P
rod
ucti
on
an
d Im
po
rts (
mcb
)
With Decreases in Local Production, Natural Gas Imports Have Increased Substantially from 2008 to 2013
10
Shale gas has the potential to serve one-third of the UK’s energy needs. This is likely to give local manufacturers competitive advantage as electricity costs rise globally.
electricity price
•The UK’s natural gas supply mix is changing
Sources: EIA and Frost & Sullivan
-
2,000
4,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Natu
ral G
as P
rod
ucti
on
an
d Im
po
rts (
mcb
)
Domestic Production Gas Imports (Pipeline) Gas Imports (LNG)
2008 2009 2010 2011 2012 ‘13
Continental Europe
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Jan E. Kristiansen
Partner & Director, Europe
The Key Questions: When and How?Growth will remain stagnant in 2013 with key industries breaking ground
Growth Revival Expected in H2 2013 for Many Developed Economies in Europe, 2013
•Growth revival expected in H2 2013
•Fiscal consolidation expected in the next 12 months
•Structural consolidation measures expected to slow in 2014
(2.5)
(1.5)
(0.5)
0.5
1.5
2.5
France Germany Italy Spain United Kingdom
GD
P G
row
th (
y/y
%)
2013 Q1
2013 Q2
2013 Q3
2013 Q4
12
•Fiscal deficits expected to fall but debt-to-GDP ratios will increase
•Possible slowdown in structural reform
•High unemployment could lead to social influence on policy
(5.0)
(4.0)
(3.0)
(2.0)
(1.0)
0.0
1.0
2.0
2013 Q1 2013 Q2 2013 Q3 2013 Q4
IIP
Gro
wth
(%
)
France Germany Italy Spain United Kingdom
Manufacturing Growth is Expected to Lag Economic Growth Recovery as Regional Interdependencies Continue to Stifle
Export Orders, Europe, 2013
German manufacturing growth leads the way in
Europe’s recovery
Sources: GET-IT and Frost & Sullivan
Europe’s Economic Engine Needs the Growth Spark
20142014Further
quantitiative easing?
Growth expectations
20132013Austerity timelines
reconsidered
Unemployment at record high of 12.1%
Could the elections in
20122012Strong austerity measures
Unemployment at 11.0%
Budget deficits decreasing, debt-to-GDP ratios increasing
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expectations positive for 2014
Could the elections in Germany influence
policy?
• European leaders sign fiscal compact
• 530 Billion Euros allotted to almost 800 banks
• Financial support requested by Cyprus and Spain
• Significant downgrade in 2013 growth forecasts following Q1 poor performance
• Questioning austerity measures lead to protest and social discord - youth unemployment at 40.5% in Italy
What will bring the growth spark?
Many consider the worst to be over...
Emerging Europe Roundup
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Aroop Zutshi
Global President & Managing Partner
Increased Importance of Emerging Economies
GDP Growth During the Debt Crisis Remained Resilient in Emerging Europe and Is Expected to Assist Developed
Economies in 2014 •Natural gas market integration is essential to lower energy prices as the U.S. shale-gas revolution widens the EU’s cost gap
• Increased financial integration will make emerging economies more vulnerable to flow reversals-1.0
0.0
1.0
2.0
3.0
4.0
5.0
2011 2012 2013 2014
GD
P G
row
th (
%)
Developed Europe Emerging Europe
15
German Exports to Emerging Europe Increased During the Period of the Financial Crisis - This Trend is Expected To
Continue
0
100
200
300
400
2010 2011 2012
Exp
ort
s (
$ B
illio
n)
Developed Europe Emerging Europe
18.3% increase
since 2010
4.2% increase since 2010
Sources: GET-IT and Frost & Sullivan
•Labour mobility has increased interdependencies
•Trade is shifting to more lucrative markets in the region
•Linkages with global emerging markets have increased during the current crisis
Poll Question
Africa
17
Hendrik Malan
Operations Director, Africa
The African Renaissance Will Become Reality in the Next 10 Years - Will You be Ready?
GDP Growth
1990’s 2000’s
FDI Inflows
2.2% 5.5%
1990 2010
1990’s 2000’s
$66.32bn $342.51bn
• Agriculture & Agro-processing
• Agricultural chemicals
• Oil extraction and investment in refining capability
• Construction
• Transport, energy, water
Nigeria
Ethiopia
DRC
Ghana
Countries with High Growth and Investment Potential in Africa, 2013-2015
Africa to Average 4.8% GDP Growth
in 2013
Africa to Average 4.8% GDP Growth
in 2013
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To take advantage of this long-awaited growth cycle, early entry is vital to ensure competitive positioning - the time is now!
Source: Frost & Sullivan
Civil Wars15 5
Foreign Debt to GDP
1990’s 2000’s
61.8% 37.4%
• Transport, energy, water supply/treatment
• Healthcare Zambia
DRC
Note: Countries based on score determined from
weighted average of per capita GDP and potential
growth, GDP & GDP potential growth, FDI stock and
growth, export and import growth potential, and
population size and population growth potential
• Retail and financial services
Leveraging the GIL-100 Index with a Focus on Emerging Market Opportunities
Leveraging the GIL-100 Index for HC
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Dorman Followwill
Partner & Director, Europe
Emerging Markets Contribute Almost 30% to Leading Pharmaceutical and Healthcare Companies’ Revenue
Achievers
Leaders
Best Practice
Sales
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Emerging Opportunities
• Biologics and biosimilars; Vaccines; Molecular diagnostics
• Diagnostics imaging
• Health Information Exchange
• Technologies to support long-term care
• Medical tourism
Note: Country banding is done with a specific GDP bracket.
GIL-100 Index for Healthcare : Structuring your Emerging Market Strategy
• How should your company prioritize emergingmarkets beyond BRIC countries based on the
factors most relevant to your company and
products?
• Which countries make the most sense asmanufacturing centers based on IP protection,labor costs and access to export markets?
Top Line GrowthBottom Line
Growth
Sales Attractiveness
Investment Attractiveness
Growth Drivers
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Sales Attractiveness
Investment Attractiveness
?Tier II
Poland, Malaysia, Mexico, Philippines
Tier IChina, India, Brazil
Companies are shifting toward emerging markets for manufacturing and also to penetrate high growth domestic markets
Leveraging the GIL-100 Index for Energy
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John Raspin
Partner & Director, Energy &
Environment, Europe
Energy Trends Will Shape the Future of Economic Growth Potential
Key Energy Emerging
Economies Drive
• Solar prices are dropping
• Shale gas is here to stay
• Energy management systems
• Large-scale investment in energy supply infrastructure in emerging economies will drive growth
55% 65%
En
erg
y D
em
an
d
Sh
are
(%
)
World Share of Energy Demand, 2010 and 2025
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Key Energy Industry Trends
Economies Drive Global Energy
Markets
systems
• Energy fuel mix to drastically change by 2025
European dependence on Russian imports of natural gas will increase as climate change regulations come into effect. This will leave these countries
vulnerable to supply shocks and limited competition in the market.
45% 35%
55% 65%
2010 2025
En
erg
y D
em
an
d
Sh
are
(%
)
OECD Non-OECD
Source: Frost & Sullivan
GIL-100 Index for Energy : Structuring your Emerging Market Strategy
2000 2010 2040
Energy Consumption 27% 30%
Renewable Energy
100% ?%
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Supply Side Index
Demand Side IndexGrowth
Drivers
GIL-100 Energy Intensive Industries Attractiveness Indices
We help companies:
• Make analytical decisions about optimal markets forsales and investment in Energy Intensive Industries
•Move away from a narrow BRIC (Brazil, Russia, India,and China) focus to find a broader set of untappeddynamic countries
•Understand the broader set of factors includinginnovation and political factors
Poll Question
Macro
EMI’s ‘Macro to Micro’ Insight into Emerging Markets will help you Look at Unexplored Markets
Emerging Market Growth Monitor (EMGM)
Global Economic Tracker- Insights and Trends (GET-IT)
� Integrated emerging market country industry forecasts
� Economic insights
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Micro
Workshops
� Quarterly updates on economic trends and industry indicators
� Specific insights from emerging market experts. Economic and industry correlations
� On site or virtual workshops customized to business needs
� Facilitates development of a country pipeline
Emerging Market Growth - Executive Insights Briefings –Schedule for 2013
Region Spotlight Countries Live Date of Session
Emerging Europe Turkey 10 April 2013
Africa Nigeria 23 April 2013
Emerging Asia Pacific Myanmar 17 July 2013
28
Latin America Panama 25 July 2013
Emerging Europe Czech Republic & Romania 20 August 2013
Emerging Asia Pacific Philippines & Vietnam 25 August 2013
Africa & Middle East Egypt & Saudi Arabia 19 November 2013
Growth Innovation and Leadership: Upcoming Events
29
GIL 2013: Africa
15 August 2013
GIL 2013: France
17 October 2013
GIL 2013: Germany
19 November 2013
Growth Innovation and Leadership Congress, November 17th, Frankfurt, Germany
EMI Track at GIL 2013: Germany - Emerging Market Innovation: A Best
Practices Approach to developing your Emerging Markets Strategy
GIL 2013: Frankfurt, Germany
30
19 November 2013
gil-events.gilcommunity.com
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Q & A
Presenters and Contact Details
Dr. Vinod Aggarwal
Chief Economist
Vinnie.aggarwal.frost.com
Dr. Vinod Aggarwal
Chief Economist
Vinnie.aggarwal.frost.com
Jan E. Kristiansen
Partner & Director
Jan.kristiansen.frost.com
Jan E. Kristiansen
Partner & Director
Jan.kristiansen.frost.com
Gary Jeffery
Partner & Director,
Europe
Gary Jeffery
Partner & Director,
Europe
Aroop Zutshi
Global President &
Aroop Zutshi
Global President & Hendrik Malan
Operations Director,
Hendrik Malan
Operations Director,
Dorman Followwill,
Partner & Director,
Dorman Followwill,
Partner & Director, Global President &
Managing Partner
Aroop.zutshi.frost.com
Global President &
Managing Partner
Aroop.zutshi.frost.com
Operations Director,
Africa
Operations Director,
Africa
Partner & Director,
Europe
Partner & Director,
Europe
John Raspin, Partner &
Director, Energy &
Environment, Europe
John Raspin, Partner &
Director, Energy &
Environment, Europe
For Additional Information
Chiara CarellaHead of Corporate Communications
Europe, Israel, Africa +44 (0) 207 343 8314 [email protected]
Samantha James Marketing & Corporate Communications Executive
South Africa+27 (0)21 680 3574
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