MACRO-ECONOMIC DIMENSIONS OF THE GLOBAL FINANCIAL ...

oppositemincedManagement

Oct 28, 2013 (3 years and 9 months ago)

91 views

1

MACRO
-
ECONOMIC DIMENSIONS
OF THE GLOBAL FINANCIAL
CRISIS

Presentation to

Economic Society of Singapore

Pre
-
University Junior College Seminar


Manu Bhaskaran


August 2009

2

IN A NUTSHELL

What will post
-
crisis world look like?


Exit from the crisis
-

unusual


Not U or V


The new “normal”: a tougher world


Big changes in global landscape


Big shift in economic power


Singapore and Asia must change too

The benign era is over

3

EXIT FROM CRISIS

4

EXIT FROM CRISIS

We are not out of the woods yet


Deleveraging process not over


Banks reducing leverage, cutting loans…


Households doing same


A few more shocks/stresses to come


Commercial property etc in US


Emerging Europe


to hurt

Western banks


Currency turmoil?

5

EXIT FROM CRISIS
(2)

Huge policy response


huge costs


Monetary easing: huge increase in $$$

6

EXIT FROM CRISIS
(3)

Implications


Short term: party time!


Economic recovery firmed up


Asset bubbles: stocks, housing booming


Longer term: payback time!


Inflation fears


interest rates surge


Asset bubbles burst, more crises


7

EXIT FROM CRISIS
(4)

What is the shape of the exit?


Looks like V initially


But more shocks


W
-
shaped


A messy, troubled exit


Will we recover?


Yes, adjustments underway, will take time


Cut debt, raise savings, … all happening


8

POST
-
CRISIS WORLD

9

POST
-
CRISIS WORLD

Global economy transformed



Slower growth for many years


ƒ
Patterns of growth changed


Different structure of competitiveness


New balance of economic power


Distribution of income shifts

10

SLOWER GROWTH

Coming decade


Lower growth in US, Japan, EU


Household savings must rise


Banks have to clean up


Shadow banking system dead


Energy prices likely to rise


Shift of power to OPEC from non
-
OPEC


Demand growing

11

SLOWER GROWTH
(2)


No escaping climate change


By 2020, 2
-
3deg rise in temperatures


Businesses will face taxes, other costs



Increased regulation


Financial: much tighter, curtail innovation


Income distribution: political backlash


Protectionism

12

IMPLICATIONS

A WORLD TRANSFORMED



Balance of global economic power


US declines but not as fast as some say


China stronger but gradually



US Dollar will gradually lose role


Will have to share role with EUR etc


13

IMPLICATIONS
(2)

Changed structure of competitiveness


Currency changes


Chinese RMB must rise


Other Asian currencies as well


Country changes


China: moving up value chain


India: a rising manufacturing power


Taiwan?Indonesia
/Vietnam: a new surge


14

CONCLUSION:


SINGAPORE

AND

ASIA MUST CHANGE

15

CONCLUSION

Old economic models may not work well



Main source of growth changes


Not G3 but emerging markets


World trade and FDI growth may slow


Regulation, protectionism


More volatile
Å

more shocks, stresses


Countries must raise resilience