WORLD IN 2050
THE BRICS & BEYOND
• World Economy will double in size by 2032,
expanding at an average rate of 3%
• China will overtake the US economy by 2017
in PPP and by 2027 in market exchange rate
terms.
• India should become the third’s global
economic giant by 2050, and Brazil fourth
largest.
World in 2050
• Russia could overtake Germany to become the
largest European economy before 2020.
• Economies such as Mexico and Indonesia
could be larger than the UK and France by
2050.
• Turkey larger than Italy.
• Porland, Vietnam, Malasyia and Nigeria all
have strong long-term potential.
• Emerging economies will grow at an average
of 4% per year, compared to only 2% for
advanced economies.
• Top 8 countries by 2050: China, U.S, India,
Brazil, Japan, Russia, Mexico, Indonesia.
• By 2050, average income will still be higher in
DC than in emerging economies.
• China, India, Brazil and other EE will become
not just low cost production locations but also
increasingly large consumer markets.
• It will be important to understand and adapt
to local rules, regulations and customs.
• Some EE may become gateways to larger
markets, such as Poland as a gateway to
Russia.
• The G7 and the E7 countries combined account for more than
80% of total global GDP
• E7 countries will be more than 50% larger than the G7
countries when measured by GDP
• Currently, the E7 nations are currently just under half the size
of the G7 economies
• E7 countries could overtake G7 countries as early as 2017
• EE were relatively insulated from the global recession, and G7
nations have been much slower to recover from the global
recession.
• China will grow at 7% in the next few years,
but it will slow down after 2021 as its
economy matures.
• Aging population coupled to higher wages will
transform China from an export-driven
economy to an consumption driven economy.
• Jobs will move to Vietnam and Indonesia
• China could overtake the US by 2017
• Mexico and Indonesia could rise to be
amongst the top 10 largest economies in the
world by 2050
• Relative decline of the UK economy
• Nigeria: could become the world’s fastest
growing economy as a result if its youth and
growing working population + good uses of its
oil reserves
• The US is expected to retina its top spot in this
group on average income levels by 2050.
• That’s another reason for MNCs should not
abandon their home markets in the US and
the EU
• Decarbonisation & slower GDP growth
• Opportunities & Challenges in Emerging Markets
• Opportunities for: Retailers with strong franchise models;
global brand owners, business and financial services; creative
industries; healthcare and education providers
• Challenges: mass market manufacturers as china move up
market
• Main drivers of growth:
• A - demographics {threat of an ageing population];
• B – education: fastest educational catch-up rates in India and
Indonesia
• C – Technological Progress
CHINA’S AUTO MARKET
• China’s automotive sector grew at a
compound rate of 24% a year between 20052011
• Overtook the US as the largest single –
country new car market in 2010
• Sales close to 22 million cars by 2020
Future Trends for the Chinese Market:
a) Going bigger (SUVs), b) More second-time
buyers and they will buy more high-priced cars
• New car sales in China are forecast to
contribute 35% of the world’s car market
growth between 2011-2020
However increasing urbanization will have a big
impact on mobility demands
Air pollution and worsening traffic conditions
will prompt officials to implement car use
restrictions
GROW GLOBAL: BUILDING BUSINESS
IN BRIC COUNTRIES
• BRIC countries are a vast opportunity and are
enormous markets that are rich in resources
• Russia: ongoing economic growth and large
consumer base, appetite for new FDI to help
develop its high-tech businesses, natural
resources continue to be a prime theme in the
economy. Infrastructure replacement and
retrofitting offer potential rewards, Russia is
the key regional hub in Eastern Europe.
India
• India: Linguistics legacy has been paramount
for India in competing with other developing
economies.
• Governance, legal system, and a stock market
that is aligned with that of western markets
• India is rich in resources, however, where
India enjoys an upper hand is the IT/BPO
industry
• Although growth has slowed, the growth BRIC
have is sustainable. While legal and
infrastructure questions can be an issue, the
markets are showing true resilience to the
global downturn.
• Population: a) Brazil: 200 million, b) Russia:
142 million, c) India: 1.22 billion, d) China:
1.33 billion
• Size and strength are no longer advantages.
Speed and agility are what you now need to
make rapid decisions
PROSPERITY AT RISK
• A FUNDAMENTALLY WEAKENED US ECONOMY IS NOT ONLY
AN AMERICAN PROBLEM BUT ALSO A GLOBAL RISK
• Many see jobs as the goal, when in fact it is only through
restoring American competitiveness that good jobs can be
created and sustained.
• Many see income inequality as the central problem, when in
fact inequality is the outcome of underlying problems in skills,
opportunities and other fundamentals
• Competitiveness: the extent to which firms operating in the
US are able to compete successfully in the global economy
while supporting high and rising living standards.
• A competitive American economy would produce
robust job growth, would enable a highly
productive and prosperous middle class
• Competitiveness: hinges on improving
productivity in the long run [creating a high value
of goods and units per unit of human, capital, and
natural resources]
• Will the U.S. competitiveness to decline over the
next three years: greater pressure on workers
(wages & benefits); firms have more options than
workers!
• Firms exposed to global competition were
more pessimistic about U.S. Competitiveness
• Respondents in manufacturing have a more
negative view of the ability of firms in the U.S.
to compete than those in public
administration, finance, and sector less
exposed to international competition.
• Facilities involving large number of jobs, high-end work, and
multiple types of activities located together are moving out of
the U.S. much faster than they are moving in.
• 42% of all decisions about potentially moving existing
activities out of the USA involved research, development, and
engineering activities.
• America’s job challenge is compounded by the fact that
activities which moved out of the US tended to involve more
jobs than activities retained in
• In today’s global economy American wages and living
standards are deeply influenced by whether our productivity
offsets lower wages elsewhere
• US Strength: universities; entrepreneurship,
property rights, innovation, clusters
• Strength and Deteriorating: skilled labor,
logistics infrastructure
• Weakness and Deteriorating: legal framework;
regulation, K-12 education system. Tax code