global economy and trade head macro research nick kounis...
TRANSCRIPT
Athens, 29 February 2012
Nick KounisHead Macro ResearchGlobal Economy and Trade
Past the nadir?
2
Global economy looks to be bottoming out
Source: Markit
Manufacturing PMIs
3035404550556065
06 07 08 09 10 11 12
Eurozone US World
3
Emerging markets as well as advanced economies
Source: Markit
Manufacturing PMIs
3035404550556065
06 07 08 09 10 11 12
China Brazil India
4
The Return of Global Easing
Source: Thomson Reuters Datastream
Central bank balance sheet, January 2008 = 100
50
100
150
200
250
300
350
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Fed ECB BoE BoJ
5
Emerging markets going from rate hikes to cuts
Source: Thomson Reuters Datastream
Central bank policy rates, %
4
6
8
10
12
14
07 08 09 10 11 126
8
10
12
14
16
China India Russia Brazil (rhs)
6
ECB has averted a credit crunch
Source: ECB
ECB lending to commercial banks, EUR bn
200
400
600
800
1000
06 07 08 09 10 11 12
7
Bank funding markets starting to thaw
Source: Thomson Reuters Datastream
Eurozone bank CDS index
100
150
200
250
300
350
400
Jun-11 Sep-11 Dec-11
ECB loan
8
Sovereign bond market stress easing
Source: Thomson Reuters Datastream
2-Y government bond yield, %
2
3
4
5
6
7
8
Jun-11 Sep-11 Dec-11
IT ES
ECB loan
9
Oil prices could spoil the mood…
Source: Thomson Reuters Datastream
$ per barrel
90
100
110
120
130
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12
Brent oil prices
A $10 rise transfers 0.5% GDP from oil consumers to producers
10
…and the debt crisis could re-escalate
100
120
140
160
180
200
220
10 11 12 13 14 15 16 17 18 19 20100
120
140
160
180
200
220
PSI 70% No PSI Half of the austerity and privatization
Greek government debt, % GDP
Source: ABN AMRO GE, IMF
11
Safety net is just not big enough
Source: ABN AMRO Group Economics
EUR bn
0
200
400
600
800
1000
Remaining EUR-IMF funds 3-Y loan for IT and ES
12
Large Eurozone bank exposures to periphery
Source: EBA, ABN AMRO Group Economics
Eurozone big bank exposure to sovereign debt (% tier 1 capital)
0
20
40
60
80
100
GR incl. IR and PT incl. SP incl. IT
end December 2010 end September 2011
13
Threat of a vicious circle, euro break-up
Source: ABN AMRO Group Economics
Indebted governments
Banks Markets
Tighter financing conditions
Weakening economy
Rising bond yieldsBudget cuts
14
Who is going to save the euro?
Source: ABN AMRO Group Economics
15
Costs of super crisis outweigh costs of bail-out
Source: ABN AMRO Group Economics
Costs of bail-out: 25% GDP
Costs of euro break-up: 50 -100% GDP over 3-yrs
DefaultsBank failuresFinancial panicUncertaintyDeep recession Wealth losses
EFSF to be increased to 1.3 trillion euros
Road map to eurobonds
16
European banks tightening lending standards again
Source: ECB
Balance net tightening
-40
-20
020
40
60
80
03 04 05 06 07 08 09 10 11 12
companies mortgages consumer credit
Tighter lending standards
17
The new fiscal fundamentalism in Europe
Source: EC, ABN AMRO Group Economics
% GDP
0
2
4
6
8
10
GR IE ES PT IT FR EZ NL BE GE AU FI
budget cuts 2011-2013
1818
Need for growth, competitiveness agenda
Source: IMF, ABN AMRO Group Economics
Unit labour cost index, 2000 = 100
8090
100110120130140150
00 01 02 03 04 05 06 07 08 09 10 11
DE IT ES FR weighted avg GR & PT
19
Eurozone in recession – divergence remains
Source: ABN AMRO Group Economics
%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
DE AU BE NL FR IE EZ ES IT PT GR
GDP in 2012
20
US labour market starting to come to life
Source: Thomson Reuters Datastream
000s %
-1,000-800-600-400-200
0200400600
04 05 06 07 08 09 10 114567891011
employment change unemployment rate (rhs)
21
Asia still relies on the West for its exports
Source: Thomson Reuters Datastream
Share of total exports to US and Eurozone
05
101520
2530
35
VI CH PA IN PI HK KO IND MA TH SI
22
Productivity catch-up has a long way to go
Source: Angus Maddison, ABN AMRO GE
Per capita GDP relative to the US
0.0
0.2
0.4
0.6
0.8
1.0
1950 1960 1970 1980 1990 2000
Singapore Japan South Korea China India
23
Moderate global growth
Source: ABN AMRO Group Economics
Economic outlook 2010 2011 2012Global GDP 5.1 3.7 3.3US 3.0 1.7 2.1Eurozone 1.8 1.5 -0.8China 10.4 9.2 8.4
World trade 15.5 6.5 4.5
Global CPI 3.6 4.6 3.5Eurozone 1.6 2.7 1.6US 1.6 3.1 1.7China 3.3 5.4 4.5
Rates and FX (year-end) 24-Feb 20123-M Euribor rate 1.01 0.703-M Libor rate 0.49 0.30German 10-Y yield 2.00 2.30US 10-Y yield 1.89 2.50
EUR/USD 1.34 1.35
24
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