10 Slides on the World Economy in February 2014
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The document discusses various aspects of the world economy as of February 2014, highlighting trends in GDP growth and inflation rates across different countries. It emphasizes the influence of 'hot money' as investors shift funds to emerging markets for higher returns, while also noting the growth potential of new economies like Mexico, Indonesia, Nigeria, and Turkey. Additionally, it examines trade dynamics, particularly between the UK and the UAE, and the sectors driving UK exports.
10 Slides on the World Economy in February 2014
- 1. THE WORLD ECONOMY FEBRUARY 2014 These slides reflect the opinions of the author and not the official position of the ONS
- 2. -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Cyprus Greece Bulgaria Slovakia Portugal Lithuania Sweden Switzerland CzechRepublic Ireland Spain Croatia Latvia Italy Poland Denmark France Hungary Netherlands Malta Slovenia Belgium Germany Romania Austria Iceland Luxembourg Estonia Finland UnitedKingdom Norway Annual Change in CPI for January 2014 UK % change Source: Eurostat Price Level Changes in Europe
- 3. Facebook bought what’s app for: Facebook went shopping . . .
- 4. Facebook bought what’s app for: Facebook went shopping . . . GDP of $18.9 billion What could they have bought instead? Mozambique
- 5. 0 2 4 6 8 10 12 14 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Interest rate (%) Turkey Brazil India South Africa USA Hot money refers to when funds are moved to one country to another in order to earn a short-term profit on interest differences and exchange rate shifts. They potentially lead to instability in a country because the transfers can happen very quickly – hence the term ‘hot’. With the Fed’s interest rates set at a low 0.25% investors turned to riskier emerging economies for greater returns. Now the US economy appears to be stabilising, investors are pulling their money out of the riskier assets and back to America. To remain attractive to investors, central banks in emerging economies have increased their bank rates. You can see Turkey, India, Brazil and South Africa all saw rate rises in January, and Brazil increased theirs further in February, while the rest held steady. Source: OECD ‘Hot’ Money
- 6. 0 100 200 300 400 500 600 700 800 900 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Annual GDP, Index 2000=100 Forecasts China Russia Nigeria Indonesia India Brazil Turkey South Africa Mexico The MINTs – Mexico, Indonesia, Nigeria and Turkey have been identified as the new emerging economies to watch in the next few years. They all have young, largely literate, growing populations and low government debt levels, although they also have problems with poverty, lack of infrastructure and corruption. Although Russia and China out of the BRICS countries are still seeing high forecasted growth, the remaining countries have seen growth tail off in the last couple of years. Nigeria in particular out of the MINT economies has high growth forecasted for 2013 and 2014. Source: OECD MINTs and BRICS
- 7. Current price productivity estimates are indexed to UK=100 and show each country’s productivity relative to that of the UK in that particular year Productivity: UK vs. The World
- 8. 90 92 94 96 98 100 102 104 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 GDP Growth, Index 2008 Q1 = 100 Germany Italy UK EU28 Eurozone Spain France Source: Eurostat Quarterly GDP Growth in Europe
- 9. 6.7% 1.8% 59.1% 8.1% 1. Eurozone + Norway &Switzerland (59.1%) 2. China (8.1%) 3. USA (6.7%) 4. Japan (1.8%) Source: ONS UK Imports in December 2013
- 10. 13.5% 2.0% 53.4% 4.1% 1. Eurozone + Norway &Switzerland (53.4%) 2. USA (13.5%) 3. China (4.1%) 4. United Arab Emirates (2.0%) Source: ONS UK Exports in December 2013
- 11. 0 200 400 600 800 1000 1200 1400 1600 1800 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 £ millions Value of UK Exports to UAE Value of UK Imports from UAE The UAE is an interesting trading partner because it is resource rich and has a high GDP per capita, but it also suffers from inequality and in some ways can still be classified as a developing economy. This is reflected by the key sectors for exports from the UK which focus on infrastructure projects such as construction, financial and professional services, and education. Source: ONS UK Trade with the United Arab Emirates (UAE) Trade Case Study