Download Economic Outlook

Economic Outlook
Turning points
Global Chief Economist Helge J. Pedersen
Baltic M&A and Private Equity Forum
Riga 24 October 2013
• Global economic trends
• Nordic and Baltic economies
Global
Our baseline scenario – turning points
•
Growth picture changes - the old world wakes up while the new one has problems
•
Less expansionary monetary policy, but interest rates will be low for much longer
•
The euro remains strong - can it last?
Helge J. Pedersen
Euro area
Game changer - OMT works without being used
Helge J. Pedersen
Global
Growth around the corner – but at lower levels than
before the crisis
Helge J. Pedersen
Global
The 2014 economic heat map …
Helge J. Pedersen
Global
Low inflation and high rate of unemployment pave the
way for continued low interest rates
•
The ECB has announced a new forward
guidance strategy:
•
The Governing Council expects the key ECB
interest rates to remain at present or
lower levels for an extended period of
time. This expectation is based on the
overall subdued outlook for inflation
extending into the medium term, given the
broad-based weakness in the real
economy and subdued monetary
dynamics.
Country
Spot
3M
30Jun14 31Dec14 31Dec15
United States
0.25
0.25
0.25
0.25
1.25
Euroland
0.50
0.50
0.50
0.50
1.00
United Kingdom
0.50
0.50
0.50
0.50
1.25
Denmark
0.20
0.20
0.35
0.50
1.25
Norw ay
1.50
1.50
1.50
1.50
1.75
Sw eden
1.00
1.00
1.25
1.50
2.00
Helge J. Pedersen
Global
Reason to worry about MP-plus: new bubbles and
inflation
Inflation is always and everywhere a monetary phenomenon in
the sense that it is and can be produced only by a more rapid
increase in the quantity of money than in output. ... Milton
Friedmann, The Counter-Revolution in Monetary Theory (1970)
Helge J. Pedersen
• Global economic trends
• Nordic & Baltic economies
Nordics&Baltics
Different growth pattern …
Helge J. Pedersen
Nordics&Baltics
…not least when it comes to manufacturing production
Helge J. Pedersen
Nordics&Baltics
Sentiment indicators look promising for the short-term
outlook: PMIs
Helge J. Pedersen
Nordics&Baltics
Sentiment indicators look promising for the short-term
outlook: consumer confidence
Helge J. Pedersen
Global
Our growth forecasts in numbers
Growth, %
2011
4.0
2012
3.4
2013E
3.1
2014E
3.8
2015E
4.0
USA
Euro area
China
Japan
1.8
1.8
9.3
-0.5
2.8
-0.3
7.8
2.0
1.7
-0.5
7.5
1.6
2.9
1.0
7.3
1.3
3.2
1.5
7.0
1.0
Denmark
Norw ay
Sw eden
Finland
Estonia
1.1
2.5
3.7
2.7
8.3
-0.4
3.4
0.7
-0.8
3.2
0.3
2.0
0.8
-0.5
1.9
1.3
2.3
2.5
1.5
3.6
1.7
2.4
2.5
2.3
3.7
Poland
Russia
Latvia
Lithuania
4.5
4.4
5.5
5.9
1.9
3.4
5.6
3.6
1.4
2.4
3.9
4.0
2.5
2.7
4.4
3.8
3.5
2.8
3.2
4.0
World
1)
Helge J. Pedersen
Nordics&Baltics
Long-term growth potential depends on the
productivity development
Denmark
Estonia
Finland
Germany
Norway
Slovakia
Spain
Sweden
USA
China
Euro area
Total OECD
World
Potential labour productivity growth
Real GDP
Output gap
Potential real GDP growth
(output per employee)
Potential employment growth
growth
2012 2001-2007 2012-2017 2018-2030 2031-2050 2001-2007 2012-2017 2018-2030 2031-2050 2001-2007 2012-2017 2018-2030 2031-2050 2012-2017
-3.3
1.5
0.9
1.7
2.2
1
0.7
1.5
1.9
0.5
0.2
0.2
0.3
1.4
-3
5
3
2.8
2.2
4.2
2.7
3
2.4
0.8
0.3
-0.2
-0.1
3.5
-1.1
2.6
2.1
2.3
1.7
1.8
2
2.1
1.4
0.8
0.1
0.1
0.1
2.2
-0.8
1.3
1.6
1.2
1
0.9
1.4
1.8
1.5
0.3
0.2
-0.6
-0.4
1.7
-1.8
2.9
3.1
2.8
2
1.8
1.8
2
1.4
1.1
1.2
0.7
0.6
3.6
-0.9
4.7
3.5
2.8
1.6
3.7
3.3
2.7
1.8
0.9
0.3
0.2
-0.3
3.5
-8.7
3.4
1.5
2.2
1.5
0.3
0.7
1.6
1.7
3.1
0.8
0.6
-0.2
2.3
-2.2
2.6
2.7
2.4
1.9
1.9
1.9
2
1.4
0.7
0.8
0.4
0.4
2.7
-3.6
2.5
2.1
2.4
2.1
1.5
1.3
1.5
1.3
1
0.8
0.9
0.8
2.7
-0.8
10.2
8.9
5.5
2.8
9.2
8.4
5.9
3.6
0.9
0.5
-0.3
-0.8
8.8
-3.6
1.8
1.4
1.7
1.4
0.7
1
1.7
1.5
1.1
0.4
0
-0.2
1.7
-2.8
2.1
2
2.2
1.9
1.2
1.2
1.7
1.6
1
0.8
0.5
0.3
2.3
2.7
3.4
3.3
2.4
1.5
2.4
2.7
2.3
1.2
0.9
0.6
0.1
3.6
Source: OECD
Helge J. Pedersen
Nordics&Baltics
Reason to worry for the longer term: underinvestments
Helge J. Pedersen
Nordic&Baltics
Despite the fact that the Nordics and Baltics are among
the top 30 countries to do easy business in
Economy
Singapore
Hong Kong SAR, China
New Zealand
United States
Denmark
Norway
United Kingdom
Korea, Rep.
Georgia
Australia
Finland
Sweden
Iceland
Ireland
Germany
Estonia
Latvia
Lithuania
Switzerland
Austria
Ease of
Doing
Business
Rank
Starting a
Business
Dealing with
Getting
Construction
Electricity
Permits
Registering
Property
Getting
Credit
Protecting
Investors
Trading
Across
Borders
Paying
Taxes
Enforcing
Contracts
Resolving
Insolvency
1
4
2
5
36
12
2
5
1
12
2
2
6
1
4
60
4
3
4
2
10
17
3
1
6
32
2
4
1
21
25
17
13
4
13
17
19
25
4
6
69
22
6
16
5
33
8
14
6
23
32
13
4
34
10
6
43
23
14
7
70
25
19
21
4
3
7
19
20
62
73
1
10
16
14
21
8
8
24
26
3
75
12
49
30
3
2
14
9
7
3
50
1
4
19
33
38
30
81
10
2
11
36
37
4
70
48
44
15
18
11
49
34
21
24
40
70
23
6
9
5
13
54
25
9
35
40
32
38
8
27
22
14
45
40
1
9
40
49
41
82
3
11
15
10
106
95
53
12
6
6
28
63
9
20
106
14
2
81
23
100
72
13
5
19
21
47
35
52
14
40
70
50
7
31
72
25
59
113
83
31
4
70
52
16
24
33
27
107
48
75
5
53
70
60
24
14
40
28
97
50
8
15
23
169
18
35
20
45
29
134
75
24
34
23
100
77
26
7
12
Helge J. Pedersen
Nordics&Baltics
New investment activity is a must for the Nordics to maintain their
relatively good competitiveness and for the Baltics to improve theirs
further
The Global Competitiveness Index 2013-2014 rankings
© 2013 World Economic Forum | www.weforum.org/gcr
GCI 2013-2014
Country/Econom y
GCI 2012-2013
Rank
Score
Rank
Change
Switzerland
1
5.67
1
0
Singapore
2
5.61
2
0
Finland
3
5.54
3
0
2
Germany
4
5.51
6
United States
5
5.48
7
2
Sweden
6
5.48
4
-2
Hong Kong SAR
7
5.47
9
2
Netherlands
8
5.42
5
-3
Japan
9
5.40
10
1
United Kingdom
10
5.37
8
-2
4
Norway
11
5.33
15
Denmark
15
5.18
12
-3
China
29
4.84
29
0
Iceland
31
4.66
30
-1
Estonia
32
4.65
34
2
Spain
35
4.57
36
1
Poland
42
4.46
41
-1
-3
Lithuania
48
4.41
45
Italy
49
4.41
42
-7
Portugal
51
4.40
49
-2
Latvia
52
4.40
55
3
Russian Federation
64
4.25
67
3
Helge J. Pedersen
Global
Conclusion
•
The combination of low interest rates and a solid global economic recovery is good
news for the general M&A activity in 2014
•
New investment activity is a must for a bright future for the region
Helge J. Pedersen
Nordics&Baltics
Only a few weaknesses in the Nordic and Baltic
countries according to the early warning mechanism …
Year 2011
External imbalances and competitiveness
Internal imbalances
Thresholds
3 year average of
Current Account
Balance as % of
GDP
-4/+6%
% change (3 years)
Net International
of Real Effective
% Change (5 years)
Investment Position Exchange Rate with
in Export Market
% Change (3 years)
as % of GDP
HICP deflators
Shares
in Nominal ULC
-35%
+-5% & +-11%
-6%
+9% & +12%
Sweden
Finland
Denmark
6.6
0.6
5.0
-8.3
13.1
24.5
3.9
-1.3
-1.7
-11.6
-22.9
-16.9
1.2
9.1
4.7
1.0
-0.3
-4.9
6.3
4.6
-2.2
232
179
238
38.4
49.0
46.4
8.1
8.1
7.0
Estonia
Latvia
Lithuania
2.8
3.1
0.0
-57.8
-73.3
-52.6
0.8
-0.6
3.6
11.1
23.6
25.2
-6.2
-15.0
-8.4
3.3
4.9
2.4
6.8
-2.5
-0.8
133
125
70
6.0
42.0
39.0
14.4
18.1
15.6
% y/y change in
deflated House
Prices
+6%
Private Sector Credit Privat Sector Debt
Flow as % of GDP
as % of GDP
15%
160%
Public sector Debt
as % of GDP
60%
3 year average of
Unemployment
10%
*) Threshold indicates imbalances if variable is over the upper limit or under the lower limit
**) Former figure applies to EuroZone countries, while the latter applies to non-Euro countries
Helge J. Pedersen
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Bank Danmark A/S.
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The information provided herein is not intended to constitute and does not
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information contained herein has no regard to the specific investment
objectives, the financial situation or particular needs of any particular
recipient. Relevant and specific professional advice should always be
obtained before making any investment or credit decision. It is important to
note that past performance is not indicative of future results.
Thank you!
Helge J. Pedersen
Global Chief Economist
Economic Research
+45 3333 3126
[email protected]
Nordea Markets is not and does not purport to be an adviser as to legal,
taxation, accounting or regulatory matters in any jurisdiction.
This document may not be reproduced, distributed or published for any
purpose without the prior written consent from Nordea Markets.
Helge J. Pedersen