Escape velocity at last? Arup Raha CIMB April 2017 The Global - - PowerPoint PPT Presentation

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Escape velocity at last? Arup Raha CIMB April 2017 The Global - - PowerPoint PPT Presentation

Oct 02, 2023 447 likes •709 views

Global economy: Escape velocity at last? Arup Raha CIMB April 2017 The Global Outlook The global economy is rebounding, mainly manufacturing and trade Its been 9 years; what took so long? Balance sheet recession; the delta on global

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Global economy: Escape velocity at last?

Arup Raha CIMB April 2017

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The Global Outlook

The global economy is rebounding, mainly manufacturing and trade It’s been 9 years; what took so long? Balance sheet recession; the “delta” on global growth comes from the US; EU, JP have structural issues; China on short-term stimulus. Is it sustainable? Will crucially depend on policy What really matters for ASEAN? Trade and monetary policy US rates rise modestly; there is a lower natural rate of interest globally Rate cycle turning in ASEAN USD and RMB are the strongest influence on currencies ASEAN: A pause for now Risks Internally -- political; Externally -- US policies; geo-politics.

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IMF’s forecasts vs. actual growth

Sources:IMF, CIMB research 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 2011 2012 2013 2014 2015 2016 %yoy US's GDP (IMF's Forecast in January) World's GDP (IMF's Forecast in January) US's GDP (Actual) World's GDP (Actual)

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  • 0.6
  • 0.4
  • 0.2

0.0 0.2 0.4 0.6 0.8 1.0 2006 2007 2008 2009 2010 2011 2012 2013 Working Age Population: Aged 15-64

% yoy

Japan: Working age population: Aged 15-64

Source: Federal Reserve Bank of St. Louis, Bloomberg, CIMB research

Euro Area and Japan

Euro Area: Working age population: Aged 15-64 Euro area: GDP growth since 1960s Japan: GDP growth since 1960s

Period Real GDP growth (%) 1961-70 5.3 1971-80 3.3 1981-90 2.4 1991-00 2.2 2001-10 1.2 2011-15 0.7 Period Real GDP growth (%) 1961-70 9.3 1971-80 4.5 1981-90 4.6 1991-00 1.3 2001-10 0.9 2011-15 1.0

  • 2.0
  • 1.5
  • 1.0
  • 0.5

0.0 0.5 2006 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 %yoy

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US: Financial surplus or deficit by sector

Source: Richard Koo

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Consumption and investment during the recovery

Source: OECD, CIMB Research

Consumption Investment

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US: Labour Productivity and Real Wages

Source: OECD, CIMB Research

Labour Productivity Real wage

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US: Retail Sales

Source: Fred

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Mar-14 Mar-15 Mar-16 Mar-17 %yoy

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US: University of Michigan Consumer Sentiment

Source: Fred

60.0 65.0 70.0 75.0 80.0 85.0 90.0 95.0 100.0 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17

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Source: CEIC,CIMB research

MIST: Exports (USD term)

  • 25
  • 20
  • 15
  • 10
  • 5

5 10 15 20 25 2014 2015 2016 2017 3mma; % yoy Malaysia Indonesia Singapore Thailand

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11 Chart 1: US business investment, consumer spending, and imports

Sources: CEIC, CIMB research

Chart 2: China and Asean exports

Sources: CEIC, CIMB research

  • 8
  • 6
  • 4
  • 2

2 4 6 8

  • 35
  • 25
  • 15
  • 5

5 15 25 35 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 US Imports US Business Investment US Consumer Spending (RHS)

%yoy %yoy

  • 40
  • 30
  • 20
  • 10

10 20 30 40 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 %yoy (9 mma) China Imports form ASEAN China Exports to USA

ASEAN: The problem with exports

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US: Industrial Production Index (2012=100)

Sources: CEIC, CIMB research

96.0 98.0 100.0 102.0 104.0 106.0 108.0 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17

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13 Chart 1: US business investment, consumer spending, and imports

Sources: CEIC, CIMB research

Chart 2: China and Asean exports

Sources: CEIC, CIMB research

  • 8
  • 6
  • 4
  • 2

2 4 6 8

  • 35
  • 25
  • 15
  • 5

5 15 25 35 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 US Imports US Business Investment US Consumer Spending (RHS)

%yoy %yoy

  • 40
  • 30
  • 20
  • 10

10 20 30 40 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 %yoy (9 mma) China Imports form ASEAN China Exports to USA

ASEAN: The problem with exports

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Stimulus to Fight Landing

Sources: CEIC, xxx

The Productivity Problem

Sources: CEIC, xxx

The Labor Problem

Sources: United Nations, xxx

The Debt Problem

Sources: Wind, CIMB

China: Issues that define the medium term

20 40 60 80 100 120 140 2007 2008 2009 2010 2011 2012 2013 2014 Government Household Corporate

%

4 6 8 10 12 14 16 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Labor Prodcutivity 30 31 32 33 34 35 36 37 38 50 100 150 200 250 300 05 06 07 08 09 10 11 12 13 14 15 China: Population Aged 15-24 (LHS ) China: Median age (RHS )

Person mn Years

5% 10% 15% 20% 25% 30% 35% 40% 35.0 40.0 45.0 50.0 55.0 60.0 65.0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 PRC PMI (LHS ) TS F outstanding ex eq

% %y/y

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Source: BIS

Credit to private non - financial sector as % of GDP

100 120 140 160 180 200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 % China Japan US Euro area

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China’s exports to US and China’s imports from ASEAN

Sources: CEIC, CIMB research

  • 40.00
  • 30.00
  • 20.00
  • 10.00

0.00 10.00 20.00 30.00 40.00 50.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 %yoy (9 mma) China Imports form ASEAN China Exports to USA

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Source: CEIC,CIMB research

MIST: Exports (Volume term)

  • 35
  • 25
  • 15
  • 5

5 15 25 35 2013 2014 2015 2016 2017 3mma; %yoy Malaysia Indonesia Singapore Thailand

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Source: CEIC,CIMB research

MIST: Private consumption growth

  • 5.0

0.0 5.0 10.0 15.0 20.0 2011 2012 2013 2014 2015 2016 %yoy Malaysia Indonesia Singapore Thailand

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Source: CEIC,CIMB research

MIST: Private investment growth

  • 15.0
  • 10.0
  • 5.0

0.0 5.0 10.0 15.0 20.0 25.0 30.0 2011 2012 2013 2014 2015 2016 %yoy Malaysia Thailand Singapore Indonesia

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MIST – Where’s the response?

Fiscal deficit as % of GDP

Sources: World Bank, CIMB research

Return on assets, listed firms

Sources: East Asia and Pacific Economic Update, october 2016; WB

Credit growth - MIST

Sources: CEIC, CIMB research

Debt service ratio of private nonfinancial sector

Sources: East Asia and Pacific Economic Update, october 2016; WB

0.5 1 1.5 2 2.5 3 3.5 4 Malaysia Indonesia Thailand

%

2013 2014 2015 2016p 2017f 2018f

  • 5

5 10 15 20 25 2013 2014 2015 2016 2017 %yoy Malaysia Indonesia Singapore Thailand

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Thank you

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Changes in oil price and currencies (Index 2011=100)

Sources: CEIC, CIMB research

25.0 45.0 65.0 85.0 105.0 125.0 145.0 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Brent Crude Index USD/MYR index USD/JPY index DXY

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US Dollar Index (DXY)

Sources: CEIC, CIMB research

90.0 92.0 94.0 96.0 98.0 100.0 102.0 104.0 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 U.S. Dollar Index: daily

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US: 10 Y Bond Yield

Sources: FRED

1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 % 10-Year Treasury Constant Maturity Rate, Daily