La Economia Global para el 2016: Tendencias, Riesgos y

La Economia Global para el 2016: Tendencias, Riesgos y

La Economia Global para el
2016: Tendencias, Riesgos y
Oportunidades
Jeremy Leonard
Director de Servicios Industriales
Oxford Economics
4o Congreso de la Industria
Siderúgica Mexicana
Septiembre 2015
Global equity markets in turmoil…
World: Stock markets
Index August 1 2014=100
110
Global
105
100
95
90
85
80
Emerging
markets
75
70
Aug-14
Nov-14
Feb-15
Source : Oxford Economics/Haver Analytics
May-15
Aug-15
…as the tectonic plates of global economy shift
Five forces shaping the global economy
Five forces shaping the global economy
1. Oil supply shock triggered by change in Saudi policy
• Boosted Europe and Japan, and other net oil importers
• Undermined Russia and other oil exporters
• Impact on US more neutral given shale
Five forces shaping the global economy
1. Oil supply shock triggered by change in Saudi policy
2. Improving US economy and prospect of rising interest rates
• Pushed up dollar
• Triggered sharp reversal in capital flows for emerging markets
• Led to marked deterioration in Chinese competitiveness
Dollar in the ascendency
World: Effective exchange rates
% change in nominal effective exchange rate since August 1 2014
US
Argentina
China
Switzerland
UK
Philippines
India
Taiwan
Thailand
Poland
Korea
Eurozone
Chile
Japan
Indonesia
South Africa
Canada
Australia
Mexico
Malaysia
Turkey
Ukraine
Brazil
Russia
-50
-40
-30
-20
-10
0
Source : Oxford Economics/JPM Morgan/Haver Analytics
10
20
Five forces shaping the global economy
1. Oil supply shock triggered by change in Saudi policy
2. Improving US economy and prospect of rising interest rates
3. Quantitative easing in EZ and Japan
• Driven currencies lower and taken market share
• Helped ease worries of deflation
Five forces shaping the global economy
1. Oil supply shock triggered by change in Saudi policy
2. Improving US economy and prospect of rising interest rates
3. Quantitative easing in EZ and Japan
4. Slump in world trade growth
•
Due to combination of cyclical and structural factors
World trade growth almost stalled…
World: Goods trade growth
% year
25
20
15
Long-term
average
10
5
0
-5
-10
-15
-20
1990
1993
1996
1999
Source : Oxford Economics
2002
2005
2008
2011
2014
…with signs weakness is intensifying
Five forces shaping the global economy
1. Oil supply shock triggered by change in Saudi policy
2. Improving US economy and prospect of rising interest
rates
3. Quantitative easing in EZ and Japan
4. Slump in world trade growth
5. China slowdown
• Exacerbated commodity price collapse
• Hit regional trade hard with knock-on effects to rest of the world
Oxford Economics baseline forecast…
World GDP Growth
% Change on Previous Year
2014 2015 2016 2017
US
2.4
2.5
2.8
2.8
-0.1
0.8
1.8
1.0
0.9
1.6
1.8
1.7
Germany
1.6
1.6
2.2
1.8
France
0.2
1.2
1.7
1.7
-0.4
0.7
1.0
1.1
UK
3.0
2.6
2.8
2.5
China
7.4
6.6
5.9
5.7
India
7.1
7.5
7.5
7.0
Other Asia
3.5
3.0
3.8
4.2
Mexico
2.1
2.5
3.1
3.3
Brazil
0.1
-2.5
-1.0
1.0
Other Latin America
1.7
1.3
2.0
3.4
Eastern Europe
1.3
-0.5
1.7
3.2
MENA
3.7
3.2
3.7
4.1
World
2.7
2.6
2.8
3.1
Japan
Eurozone
of which:
Italy
Concern about a sharp China slowdown…
…with IP slump maybe even worse than reported
China: Industrial output
% year
30
25
20
Official
industrial
output (IP)
15
10
OE bottom-up
manufacturing
output
5
0
2005
2007
2009
2011
Source: Oxford Economics/Haver Analytics
2013
2015
Sectors related to construction severely hit (1)
Sectors related to construction severely hit (2)
China: Sales of construction vehicles
Units
500
Forecast
450
400
350
300
250
200
150
100
50
0
2006
2008
2010
2012
Source : Oxford Economics/Off-Highway Research
2014
2016
2018
Excess capacity hitting profits
Equity market slump adds to worries
More rate cuts in the cards…
Interest rates
%
8
6
4
Bill financing rate
2
B mark lending rate: 1 yr
3 month interbank rate
0
2012
2013
2014
Source: Oxford Economics, CEIC Data
2015
…and more infrastructure spending
A mixed investment picture
% yoy, 3mma
60
FAI in real estate
FAI in infrastructure
50
FAI by corporate sector
40
30
20
10
0
2005
2007
2009
Source: Oxford Economics, CECI Data
2011
2013
2015
What is in store for the RMB?
Recent appreciation too rapid
Index (2010=100)
140
130
NEER
120
REER
110
Fair value trend REER
100
90
80
70
60
50
40
1995
1999
2003
2007
Source: Oxford Economics, CEIC Data
2011
2015
Baseline modest slowdown but risks substantial
US: 10-year government bond yields
%, EOP
6
Forecast
5
Baseline
4
3
2
Chinese hard
landing
1
2007
2009
2011
2013
2015
Source : Oxford Economics/Haver Analytics
2017
2019
Which countries are most exposed to China risk?
Exports to China, Net commodity
% of total
exports, % of GDP
Australia
Chile
Malaysia
Brazil
Russia
Indonesia
Argentina
South Africa
Taiwan
US
Thailand
Japan
Korea
Canada
Philippines
UK Mexico
Eurozone
Poland
Turkey
India
33.7
24.4
13.5
18.0
6.7
11.9
6.8
9.6
27.0
7.7
11.9
18.0
26.0
3.7
12.0
4.1
1.5
6.4
1.0
1.8
4.2
9.4
16.6
9.0
3.9
17.4
6.5
8.1
2.2
‐13.8
‐1.6
‐2.9
‐6.6
‐14.8
6.0
‐5.2
‐2.8
1.4
‐4.0
‐1.9
‐3.6
‐5.4
Overall risk
rank
1
2
3
4
5
6
7
8
9
10=
10=
12=
12=
14=
14=
16=
16=
18
19
20=
20=
Current account, Currency change vs.
% of GDP (memo) US$ since Aug 10, %
‐2.9
‐0.3
2.9
‐4.2
4.9
‐2.4
‐2.4
‐5.3
15.3
‐2.3
4.2
2.4
7.9
‐4.4
4.4
‐5.2
‐2.1
2.7
0.1
‐5.0
‐1.3
‐3.0
‐0.9
‐7.1
‐12.9
‐5.3
‐6.3
‐1.8
‐5.0
‐2.5
0.6
‐1.5
3.9
‐1.2
‐1.7
‐1.1
‐0.4
‐3.0
‐2.6
2.5
‐7.5
‐3.2
Mexico a shining star in Latin America…
Latin America: GDP growth forecast for 2015
Colombia
3.0
Mexico
2.5
Peru
2.4
Chile
Latin America: Potential GDP growth
% year
5
2.2
Argentina
4.8
0.4
2003-12
-0.5
Latin America
2013-22
4.3
4
Brazil
-2.5
Venezuela
3.4
3.1
-6.0
3.1
3.1
3
-7
-6
-5
Source: Oxford Economics
-4
-3
-2
-1
0
1
2
3
4
% year
2.3
2
1.4
1
0
Brazil
Mexico
Source: Oxford Economics
Argentina
Chile
…with steady improvements in competitiveness
A key hub in regional automotive markets
Surveys point to solid US GDP growth in H2
Labor market slack continues to fall rapidly
August
173,000
3 months
221,000
12 months
243,000
Real consumer spending averaging 3% for past year
Housing activity appears to be turning corner
30
But low oil prices hitting capex…
…and strong dollar is hurting exports
Pick-up in wage growth critical to outlook
Fed lift-off & path of tightening
 While there is intense debate on the start of Fed rate lift-off,
the path is more important than initial rate hike
FOMC Prob of
Meeting rate lift-off
Oct
15%
Dec
65%
2016
20%
Conditions
Hawks prevail and doves reassured
Financial markets: stabilize & rebound over the coming month
US economy: intermeeting data surprisingly strong, wages rise meaningfully
Global economy: No further signs of deterioration and impact on US modest
Doves finally reassured
Financial markets: stabilize and gradually rebound
US economy: incoming data remains solid
Global economy: No further signs of deterioration and impact on US modest
Hawks join doves
Financial markets: increased volatility
US economy: income data disappoint
Global economy: Signs of further deterioration and possible hard landing
Europe matters more to US than China
Euro area recovery has surprised many
Euro area GDP
%
6
4
2
0
-2
GDP % q/q
GDP % y/y
-4
-6
2000
2004
2008
Source : Oxford Economics/Haver Analytics
2012
2016
Consumption is the new engine of growth…
Euro area consumer confidence
% y/y
4
% balance
10
3
0
2
-10
1
0
-20
-1
Consumer Confidence
-30
-40
2000
Consumption % y/y
-2
-3
2003
2006
2009
Source: Oxford Economics/Haver Analytics
2012
2015
…as austerity ends and employment strengthens
Eurozone: Employment & emp. intentions
Percent balance
15
EC survey of
employment
intentions (LHS)
10
% quarter
0.8
0.6
0.4
5
0.2
0
0.0
-5
-0.2
-10
-0.4
Employment
(RHS)
-15
-0.6
-20
-0.8
-25
2004
-1.0
2006
2008
2010
Source : Oxford Economics/Haver Analytics
2012
2014
Credit standards eased and lending is picking up
ECB Bank lending survey: Mortgage Lending
% balance
60
Past 3 months
Next 3 months
40
20
0
-20
-40
-60
-80
2003
2005
2007
2009
2011
Source: Oxford Economics/Thomson Reuters Datastream
2013
2015
Exports benefiting from weak euro
…and investment to recover, albeit slowly
Euro area investment and capacity utilisation
% y/y
10
90
5
85
0
80
-5
75
Investment % y/y
Capacity Ultilisation
-10
-15
1996
70
65
1999
2002
2005
Source : Oxford Economics/Haver Analytics
2008
2011
2014
Global steel markets in state of crisis…
42
…and imports the “diablo” of Mexican market
43
Oxford Economics baseline forecast…
World GDP Growth
% Change on Previous Year
2014 2015 2016 2017
US
2.4
2.5
2.8
2.8
-0.1
0.8
1.8
1.0
0.9
1.6
1.8
1.7
Germany
1.6
1.6
2.2
1.8
France
0.2
1.2
1.7
1.7
-0.4
0.7
1.0
1.1
UK
3.0
2.6
2.8
2.5
China
7.4
6.6
5.9
5.7
India
7.1
7.5
7.5
7.0
Other Asia
3.5
3.0
3.8
4.2
Mexico
2.1
2.5
3.1
3.3
Brazil
0.1
-2.5
-1.0
1.0
Other Latin America
1.7
1.3
2.0
3.4
Eastern Europe
1.3
-0.5
1.7
3.2
MENA
3.7
3.2
3.7
4.1
World
2.7
2.6
2.8
3.1
Japan
Eurozone
of which:
Italy
Conclusions
 World growth forecast at 2.6% for 2015, 2.8% for 2016. Still weak for a
recovery period.
 Big risk to world growth now is deflationary shock emanating from
slowdown in China which hits other emerging markets hard. Stock
market correction a recognition of this threat.
 Chinese growth better than doomsters fear but more policy action
needed from Beijing to support growth  global steel markets suffering
from continuing Chinese overcapacity.
 US, Eurozone so far relatively resilient to the shock and their domestic
demand is improving. Trade with and between these regions will help
support growth in face of a slower China.
 This bodes well for Mexico’s outlook, but more on that tomorrow!