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WORLD IN 2050

WORLD IN 2050. THE BRICS & BEYOND. World Economy will double in size by 2032, expanding at an average rate of 3% China will overtake the US economy by 2017 in PPP and by 2027 in market exchange rate terms.

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WORLD IN 2050

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  1. WORLD IN 2050

  2. THE BRICS & BEYOND • World Economy will double in size by 2032, expanding at an average rate of 3% • China will overtake the US economy by 2017 in PPP and by 2027 in market exchange rate terms. • India should become the third’s global economic giant by 2050, and Brazil fourth largest.

  3. World in 2050 • Russia could overtake Germany to become the largest European economy before 2020. • Economies such as Mexico and Indonesia could be larger than the UK and France by 2050. • Turkey larger than Italy. • Porland, Vietnam, Malasyia and Nigeria all have strong long-term potential.

  4. Emerging economies will grow at an average of 4% per year, compared to only 2% for advanced economies. • Top 8 countries by 2050: China, U.S, India, Brazil, Japan, Russia, Mexico, Indonesia. • By 2050, average income will still be higher in DC than in emerging economies.

  5. China, India, Brazil and other EE will become not just low cost production locations but also increasingly large consumer markets. • It will be important to understand and adapt to local rules, regulations and customs. • Some EE may become gateways to larger markets, such as Poland as a gateway to Russia.

  6. The G7 and the E7 countries combined account for more than 80% of total global GDP • E7 countries will be more than 50% larger than the G7 countries when measured by GDP • Currently, the E7 nations are currently just under half the size of the G7 economies • E7 countries could overtake G7 countries as early as 2017 • EE were relatively insulated from the global recession, and G7 nations have been much slower to recover from the global recession.

  7. China will grow at 7% in the next few years, but it will slow down after 2021 as its economy matures. • Aging population coupled to higher wages will transform China from an export-driven economy to an consumption driven economy. • Jobs will move to Vietnam and Indonesia • China could overtake the US by 2017

  8. Mexico and Indonesia could rise to be amongst the top 10 largest economies in the world by 2050 • Relative decline of the UK economy • Nigeria: could become the world’s fastest growing economy as a result if its youth and growing working population + good uses of its oil reserves

  9. The US is expected to retina its top spot in this group on average income levels by 2050. • That’s another reason for MNCs should not abandon their home markets in the US and the EU • Decarbonisation & slower GDP growth

  10. Opportunities & Challenges in Emerging Markets • Opportunities for: Retailers with strong franchise models; global brand owners, business and financial services; creative industries; healthcare and education providers • Challenges: mass market manufacturers as china move up market • Main drivers of growth: • A - demographics {threat of an ageing population]; • B – education: fastest educational catch-up rates in India and Indonesia • C – Technological Progress

  11. CHINA’S AUTO MARKET • China’s automotive sector grew at a compound rate of 24% a year between 2005-2011 • Overtook the US as the largest single – country new car market in 2010 • Sales close to 22 million cars by 2020 Future Trends for the Chinese Market: a) Going bigger (SUVs), b) More second-time buyers and they will buy more high-priced cars

  12. New car sales in China are forecast to contribute 35% of the world’s car market growth between 2011-2020 However increasing urbanization will have a big impact on mobility demands Air pollution and worsening traffic conditions will prompt officials to implement car use restrictions

  13. GROW GLOBAL: BUILDING BUSINESS IN BRIC COUNTRIES • BRIC countries are a vast opportunity and are enormous markets that are rich in resources • Russia: ongoing economic growth and large consumer base, appetite for new FDI to help develop its high-tech businesses, natural resources continue to be a prime theme in the economy. Infrastructure replacement and retrofitting offer potential rewards, Russia is the key regional hub in Eastern Europe.

  14. India • India: Linguistics legacy has been paramount for India in competing with other developing economies. • Governance, legal system, and a stock market that is aligned with that of western markets • India is rich in resources, however, where India enjoys an upper hand is the IT/BPO industry

  15. Although growth has slowed, the growth BRIC have is sustainable. While legal and infrastructure questions can be an issue, the markets are showing true resilience to the global downturn. • Population: a) Brazil: 200 million, b) Russia: 142 million, c) India: 1.22 billion, d) China: 1.33 billion

  16. Size and strength are no longer advantages. Speed and agility are what you now need to make rapid decisions

  17. PROSPERITY AT RISK • A FUNDAMENTALLY WEAKENED US ECONOMY IS NOT ONLY AN AMERICAN PROBLEM BUT ALSO A GLOBAL RISK • Many see jobs as the goal, when in fact it is only through restoring American competitiveness that good jobs can be created and sustained. • Many see income inequality as the central problem, when in fact inequality is the outcome of underlying problems in skills, opportunities and other fundamentals • Competitiveness: the extent to which firms operating in the US are able to compete successfully in the global economy while supporting high and rising living standards.

  18. A competitive American economy would produce robust job growth, would enable a highly productive and prosperous middle class • Competitiveness: hinges on improving productivity in the long run [creating a high value of goods and units per unit of human, capital, and natural resources] • Will the U.S. competitiveness to decline over the next three years: greater pressure on workers (wages & benefits); firms have more options than workers!

  19. Firms exposed to global competition were more pessimistic about U.S. Competitiveness • Respondents in manufacturing have a more negative view of the ability of firms in the U.S. to compete than those in public administration, finance, and sector less exposed to international competition.

  20. Facilities involving large number of jobs, high-end work, and multiple types of activities located together are moving out of the U.S. much faster than they are moving in. • 42% of all decisions about potentially moving existing activities out of the USA involved research, development, and engineering activities. • America’s job challenge is compounded by the fact that activities which moved out of the US tended to involve more jobs than activities retained in • In today’s global economy American wages and living standards are deeply influenced by whether our productivity offsets lower wages elsewhere

  21. US Strength: universities; entrepreneurship, property rights, innovation, clusters • Strength and Deteriorating: skilled labor, logistics infrastructure • Weakness and Deteriorating: legal framework; regulation, K-12 education system. Tax code

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