Economic Outlook for 2016 Arturo Bris Professor of Finance, IMD Director, IMD World Competitiveness Center Yale International Center for Finance European Corporate Governance Institute 2015 IMD International. Not to be used or reproduced without permission. IMD 2007-2015
Quizz Which country has achieved positive GDP growth in all but one years since 1960? China Colombia Germany Nigeria USA IMD 2007-2015 2
Quizz Which country has achieved positive GDP growth in all but one years since 1960? China Colombia Germany Nigeria USA IMD 2007-2015 3
Richest nations: Gross National Income per Capita 1965 1995 2005 2014 Only 2 countries consistently in top 10 IMD 2007-2015 4
June 21 st, 2015 IMD 2007-2015 5
Quizz One of these countries was not among the top 10 richest countries (by GDP per capita) in 1978 Japan Libya Saudi Arabia UK Germany IMD 2007-2015 6
Quizz Sorry, wrong question Only one of these countries was among the top 10 richest countries (by GDP per capita) in 1978 Japan Libya Saudi Arabia UK Germany IMD 2007-2015 7
Quizz Sorry, wrong question Only one of these countries was among the top 10 richest countries (by GDP per capita) in 1978 Japan Libya Saudi Arabia UK Germany IMD 2007-2015 8
August 25 th, 2015 IMD 2007-2015 9
GDP Growth Actual and Expected 16 14 12 10 8 6 4 2007 2015 2 0-2 -4 IMD 2007-2015
Growth: Back to Normal Financial Times, June 11 th 2015 IMD 2007-2015 11
The Requirements of a Competitive System: Self-Assessment 1. A Good Government Does your country have a government which: Enacts/Enforces regulation which promotes business creation, Focuses on job creation as priority #1, Opens the country to trade Enjoys a healthy financial position Is stable? IMD 2007-2015 12
Competitiveness: A confusing concept The Rajoy government belongs squarely in the second camp: it slashed public spending in the middle of a harsh recession, and pushed through a series of deeply unpopular reforms to raise the competitiveness of its export sector. In a strangely masochistic inversion of political practice, government officials hailed every fall in Spanish wages they have slipped in nine out of 14 quarters since Mr Rajoy took office as a sign of progress. Financial Times, October 22 nd 2015 IMD 2007-2015 13
The Requirements of a Competitive System: Self-Assessment 2. Investing in people Does government policy provides resources so that: Education and Health Systems are of high quality, Infrastructure is reliable and supports business, Fosters innovation, Improves quality of life for people? IMD 2007-2015 14
BRICS MINT? The Economist, November 2009 The Economist, September 2013 IMD 2007-2015 15
Countries require good basic infrastructure Number of Ikea Stores per Capita IMD 2015 World Competitive eness Ranking -0.2-4 -2 0 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 Source: IMD World Competitiveness Center The size of the bubble indicates the number of stores in the country IMD 2007-2015 16
The Requirements of a Competitive System: Self-Assessment 3. A value-enhancing business culture Do enterprises in your country: Have access to financing, even if small, Do they enjoy a healthy financial position Do have good governance systems, Are productive and efficient, Are managed by executives with the right values and attitudes? IMD 2007-2015 17
Croatia Source: The Economist IMD 2007-2015 18
The government does not create jobs, the private sector does IMD 2007-2015 19
The big cloud: Terrorism Baghdad, Iraq October 5, 2015: 57 dead Ankara, Turkey October 11, 2015: 95 dead Maiduguri / Yola, Nigeria October 14, 2015: 42 dead Sinai, Egypt October 31, 2015: 224 dead Beirut, Lebanon November 12, 2015: 47 dead Paris, France November 13, 2015: 129 dead Source: several online news outlets IMD 2007-2015 20
Markets Today IMD 2007-2015 21
The big questions: Innovation Does innovation create jobs? Source: The Economist, January 2014 IMD 2007-2015 22
Growth and Innovation Innovation increases income inequality A futuristic world with: Wealthy, successful and retired entrepreneurs A highly-skilled, productive middle class A poor, less educated, unemployed and subsidized low class IMD 2007-2015 23
The big questions: Trade Treaties Trade openness is only advantageous in late stages of economic development Trade benefits the big country Protectionism and economic strategy: Grossman and Helpman (2001): A free-trade agreement is most likely to politically viable exactly when it would be socially harmful. IMD 2007-2015 24
The big opportunity: Talent Management IMD 2007-2015 25
The big opportunity: Talent Management IMD 2007-2015 26
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Thank you @arturobris IMD 2007-2015 33
WCY 2015 Country WCY 2014 Change WCY 2015 Country 1 USA 1-31 Estonia 30-1 2 China Hong Kong 4 +2 32 France 27-5 3 Singapore 3-33 Poland 36 +3 4 Switzerland 2-2 34 Kazakhstan 32-2 5 Canada 7 +2 35 Chile 31-4 6 Luxembourg 11 +5 36 Portugal 43 +7 7 Norway 10 +3 37 Spain 39 +2 8 Denmark 9 +1 38 Italy 46 +8 9 Sweden 5-4 39 Mexico 41 +2 10 Germany 6-4 40 Turkey 40-11 Taiwan 13 +2 41 Philippines 42 +1 12 UAE 8-4 42 Indonesia 37-5 13 Qatar 19 +6 43 Latvia 35-8 14 Malaysia 12-2 44 India 44-15 Netherlands 14-1 45 Russia 38-7 16 Ireland 15-1 46 Slovak Republic 45-1 17 New Zealand 20 +3 47 Romania 47-18 Australia 17-1 48 Hungary 48-19 United Kingdom 16-3 49 Slovenia 55 +6 20 Finland 18-2 50 Greece 57 +7 21 Israel 24 +3 51 Colombia 51-22 China Mainland 23 +1 52 Jordan 53 +1 23 Belgium 28 +5 53 South Africa 52-1 24 Iceland 25 +1 54 Peru 50-4 25 Korea Rep. 26 +1 55 Bulgaria 56 +1 26 Austria 22-4 56 Brazil 54-2 27 Japan 21-6 57 Mongolia N/A 28 Lithuania 34 +6 58 Croatia 59 +1 29 Czech Republic 33 +4 59 Argentina 58-1 30 Thailand 29-1 60 Ukraine 49-11 61 Venezuela 60-1 IMD 2007-2015 34 WCY 2014 Change