Global Economic Outlook - Amazon S3 · 2013-06-11 · Global Economic Outlook Q2 2013 2. Next, I discuss the radically new policy of the Japanese government. ... changed relative

Global Economic Outlook 2nd Quarter 2013

Dr. Ira Kalish, DeloitteResearch in theUnited States,Deloitte Services LP

The global economic environment shows signs of improving, but in fits and starts. Troubling events keep getting in the way of an unambiguously positive story. Still, the story appears to be

getting better. Financial market stress in Europe remains at manageable levels despite the crisis in Cyprus. In the United States, a substantial contraction of fiscal policy appears to be offset by other positive factors. In Japan, a new monetary policy holds promise of better growth. Here are the high-lights of this quarter’s Global Economic Outlook.

We begin with Alexander Börsch’s analysis of the Eurozone economy. Alexander’s view for Europe is relatively optimistic: He continues to believe that the immediate risk of Eurozone failure remains low. In addition, he believes that the Eurozone will “return to feeble growth” in 2013. He worries, however, that Europe could be condemned to a prolonged period of low growth if it con-tinues to experience low investment.

Next, Patricia Buckley opines that the recovery in the United States is likely to accelerate. She says that fiscal austerity “will definitely dampen the rate of acceleration, but will not be sufficient to actually stop it.” Among the positive factors she cites are a revival of household wealth and unusu-ally slow household formation. The latter has created pent-up demand for new homes. Patricia notes, however, that there remains uncertainty about future fiscal policy.

In our next article, I offer my views on the Chinese economy. Specifically, the outlook seems mixed, with positive news about exports and investment but mixed news about the overall per-formance of the manufacturing sector. In addition, I discuss potential policy initiatives of the new government, including a possible dismantling of the much-maligned residency permit system.

Global Economic OutlookQ2 2013

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Next, I discuss the radically new policy of the Japanese government. This includes fiscal stimulus, monetary expansion, and freer trade. Although it is too early to say whether the new policy will be effective, it is clear that it is already having an impact on financial markets. Japanese equity prices have risen, and the yen has fallen. The latter should ultimately be helpful to export growth.

In our next article, Pralhad Burli offers a cautiously optimistic view on the Indian economy. He suggests that the worst is over as the global economy shows signs of revival. He notes that business confidence is improving as a result of bet-ter global economic performance and anticipated economic reforms in India.

Finally, in our last article, I offer some thoughts on the controversy over government deficits. Given that there are substantially different fiscal policies in the United States versus Europe, and dramatically different views among policy makers in both parts of the world, it is useful to consider the arguments. In this article, I look at the pros and cons of deficits, the theories underlying the arguments, and the lessons to be learned.

Dr. Ira KalishDirector of Global EconomicsDeloitte Research

Global Economic Outlook published quarterly by Deloitte Research

Editor-in-chiefIra Kalish

Managing editorRyan Alvanos

Contributors Alexander BörschPatricia BuckleyPralhad Burli

Editorial address350 South Grand StreetLos Angeles, CA 90013Tel: +1 213 688 [email protected]

Preface

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Geographies

Eurozone: A silver lining on the growth horizon?—| 6

For the Eurozone, 2013 will be a year of transition. Although the GDP fall in the Eurozone’s crisis countries has slowed down, short-term growth will likely be anemic rather than explosive.

United States: Poised for accelerating growth in the near term | 10

Slowly improving employment, growing household wealth, and the limits placed on sequestration’s economic impact suggest that the United States is headed toward a period of accelerating growth.

China: A slow recovery | 16Economic recovery from the slowdown in 2012 has been weaker than anticipated. Chinese leadership is hinting at possible reforms, and the government is beginning to revisit income distribution as segments of the population move from rural to urban areas.

Japan: A new regime | 20Japan’s Liberal Democratic Party experienced a landslide victory, and its economy is improving dramatically. The Bank of Japan is planning to implement more aggressive policies. Fiscal stimulus and participa-tion in a Trans-Pacific Partnership augur well for the country’s outlook.

India: Citius, altius, fortius | 24The Indian economy is showing early signs of a recovery, suggest-ing that the worst may be over. The government has laid out a fiscal consolidation plan that, coupled with a moderation in wholesale prices, gives the central bank flexibility to reduce interest rates in the near future. Furthermore, the buoyancy of equity markets and an uptick in portfolio investments underscore the return of investor confidence.

Contents

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Special topic

Deficits: Why all the fuss? | 30Most of the world’s rich countries are running large budget deficits; some are engaging in austerity measures, while others are not taking much action to bring the deficits under control. So should we worry about deficits, and, if so, why?

Appendix

Charts and tables | 34GDP growth rates, inflation rates, major currencies vs. the US dollar, yield curves, composite median GDP forecasts, composite median cur-rency forecasts, OECD composite leading indicators

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FoR a moment in the first quarter, it looked as if the euro crisis would raise its head

again. Italy’s elections were considered the biggest risk for the stability of the Eurozone in early 2013. Indeed, their inconclusive results, along with the looming risk of paralysis in government formation and reform imple-mentation, seemed to reinforce investors’ biggest fears.

Nevertheless, markets got over it remark-ably well. After a short jump in interest-rate spreads, they eased at a level well below last year’s peak. Also, the uncertainties and the policy confusion about the rescue package for Cyprus have not unsettled the financial markets in a substantial way. At the same time, other crisis countries could restore their access

to the capital markets. Ireland managed to issue a substantially oversubscribed 10-year bond in March, the first after its bailout in 2010.

The financial markets’ indif-ference to potential crisis trig-gers and Ireland’s return to the capital markets support a point made in the last Global Economic Outlook: The immediate danger of the Eurozone’s breaking up has been fading to the background. True, there are scenarios in which the crisis could erupt again. However, this tail risk has shrunk substantially. Investors trust the

EUROZONE

Dr. Alexander Börsch is head of research, Deloitte Germany

Eurozone: A silver lining on the growth horizon?by Dr. Alexander BÖrsch

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GeographiesEurozone

European Central Bank to prevent a breakup. The root factors of economic uncertainty have changed relative to the growth prospects of the Eurozone.

Looking at the growth prospects of the Eurozone, 2013 will be a year of transition. The good news is that the GDP fall in the Eurozone’s crisis countries has slowed down. The worst is likely behind us. The bad news is

that short-term growth will likely be anemic rather than explosive.

Return to feeble growth in 2013

Real GDP in the Eurozone in 2012 fell by 0.6 percent, and the Eurozone experienced a very weak fourth quarter with the reces-sion deepening. In all, 2012 was a nasty year for the Eurozone economy. According to the Organization for Economic Cooperation and Development (OECD), the actual GDP was 3.7 percent below the potential GDP.1 Several factors have contributed to the dismal growth performance. The two most important were that the restrictive fiscal policy in the Eurozone reduced domestic demand, while the uncer-tainty about the future of the euro strained pri-vate investment as well as private consumption.

Both factors will continue to influence the Eurozone’s growth in 2013. However, their negative impact will get weaker. Fiscal policy will be less restrictive than the year before, and, assuming no escalation of the debt crisis, uncertainty will decline and business and con-sumer confidence will recover.2

Exports in combination with the expan-sive monetary policy are the relatively bright spots for the Eurozone. Assuming accelerating growth in the emerging markets and a slightly higher growth in the United States, Eurozone exports will increase, helped by improved competitiveness. The shaky domestic economic situation will continue to constrain domestic demand and, by implication, imports, so that exports and the external balance should be the main growth driver for the Eurozone.

In this scenario, the Eurozone should stabilize in the first half of 2013 and return to weak growth in the second half. Growth will be weak as the Eurozone continues to need to strengthen household, firm, bank, and sover-eign balance sheets.

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Early indicators indicate trend reversal

The main early indicators and the stock markets anticipate this trend reversal. The Euro Stoxx 50 has gained around 30 percent since June 2012. While the main confidence in the Eurozone indicators went down the most part of 2012, in autumn the trend stopped and reversed. Confidence in almost all major sec-tors has been increasing, especially in industry and services, even if the upward trend is slow and bumpy (figure 1). Although overall eco-nomic sentiment is still in negative territory—the combined Economic Sentiment Indicator stands at 90, while a positive outlook starts at 100—this suggests that the Eurozone economy has bottomed out in the first quarter.3

This trend reversal is even more pro-nounced in the early indicators for the German economy. After a weak fourth quarter, with GDP decreasing by 0.6 percent, fears of a coming recession emerged but are likely exag-gerated. The two most important confidence indicators, the Ifo Business Climate Index and

the ZEW Index, rose substantially. In February, the Ifo index increased the most since mid-2010, rising, as did the ZEW index, the fourth time in a row. In March, both indices largely stagnated. However, given the strong increases before, this indicates stabilization of a basically upward trend. Correspondingly, the German stock index DAX broke the 8,000-point mark in early April, the first time since 2008.

Phoenix vs. Japan

While these signs are encouraging, they are no guarantee that this trend reversal indicates an accelerating and substantially higher growth trajectory beyond 2013. Recent economic history suggests two scenarios for growth performance after a financial crisis. One is the relatively rapid recovery of the real economy in the emerging Asian countries after the finan-cial crisis in the late 1990s. The other is Japan’s lost decade following the burst of its housing bubble and the resulting banking problems in the early 1990s.

Both analogies are not perfect, and start-ing points differ substantially, but they illuminate the range of broad paths conceivable for the Eurozone. In a “phoe-nix from the ashes” scenario, the current crisis countries in Southern Europe would emerge much leaner and more competitive from the cur-rent crisis and could export their way out of the crisis, similar to Germany a few years ago. A stronger trad-ables sector, combined with reforms in the service sectors, would boost productivity and growth. A Japanese sce-nario with no or low growth would likely emerge with

Global Economic Outlook: 2nd Quarter 2013

Figure 1. Eurozone economic sentiment indicator—components (net balance positive-negative expectations)

Graphic: Deloitte University Press | DUPress.com

Services confidenceIndustry confidence Consumer confidence

Retail trade confidence Construction confidence

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3/132/131/1312/1211/1210/129/128/127/126/125/124/123/12

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GeographiesEurozone

continuing uncertainty and absent reforms.

The Eurozone’s investment gap

The biggest danger for the Eurozone to fall into a low-growth trap comes from a dramatic investment gap. Longer-term growth and employment prospects depend on investments. Looking at the main components of the Eurozone’s GDP shows that investments have been the hardest-hit component during the crisis. As displayed in fig-ure 2, the growth rates of government expen-diture and household expenditure declined substantially but continued to grow since the onset of the crisis, compared to the preceding boom years.

The most dramatic drop, however, took place in investment activity. While invest-ments grew by 30 percent (in nominal terms) between 2003 and 2007, they fell by 12 percent between 2008 and 2012. Investments in 2012 were €220 billion below the 2007 value. At the same time, corporate cash holdings rose massively, indicating a grossly heightened risk aversion on the part of companies.4

Jumpstarting private investment activity is therefore one, if not the key, way to avert a Japanese-style scenario. Corporates seem to need some convincing to invest more. Stable

expectations regarding the economic environ-ment, low uncertainty, and possibly effective investment incentives would definitely help.

Outlook

The worst part of the current downturn in the Eurozone seems to be ending, and it is likely that a shaky recovery will set in. Exports are the main driver for this recovery, while demand and investments do not lend support to economic growth. The Eurozone contin-ues to struggle with many growth-inhibiting aftereffects of the financial crisis and the euro crisis, and with a deeply divided economic performance. Seen from this perspective, even a shaky recovery would be good news and something to build upon.

Figure 2. Growth-rate GDP components (%)


2008–2012

2003–2007

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Household final consumption expenditure

Government final consumption expenditure

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7.6

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4.7

1. OECD, “Interim Economic Outlook,” Economic Outlook Annex Tables, March 28, 2013, http://www.oecd.org/eco/outlook/economicoutlookannextables.htm, accessed April 15, 2013.

2. European Economic Advisory Group, The EEAG Report on the European Economy, CESifo Group, 2013.

3. European Commission, European Economic Forecast—Winter 2013.

4. “Iron enters the soul,” Economist, October 6, 2012.

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ImPRoveD economic fundamentals, as reflected in rising household wealth and a

recovering housing market, have positioned the US economy on the verge of entering a period of accelerating growth. The spark igniting the acceleration will come as the slowly improving employment situation finally reaches a tipping point where it begins unleashing years of pent-up demand from people who have been prevented by economic circumstances from establishing separate liv-ing units. The combination of higher taxes—particularly the expiration of the temporary payroll tax reduction—and the fiscal austerity

measures known as “sequestration” will defi-nitely dampen the rate of acceleration, but will not be sufficient to actually stop it.

If things are going so well, what happened in Q4 2012?

Before moving to the outlook, an explana-tion of what happened during the final quarter of 2012 is needed. Although revisions moved Q4 2012 real GDP growth into positive ter-ritory, a reading of 0.4 percent would gener-ally have observers worried that the United States was at risk of falling back into recession,

USA

Dr. Patricia Buckley is director of economic Policy and Analysis at Deloitte Research, Deloitte Services LP

United States: Poised for accelerating growth in the near term by Dr. Patricia Buckley

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GeographiesUnited States

United States: Poised for accelerating growth in the near term by Dr. Patricia Buckley

notwithstanding the relatively solid growth seen earlier in the year. However, the strength of important subcomponents in Q4 2012 and the recognition that growth in Q3 2012 was artificially inflated by factors that were sure to be reversed kept concerns in check.

Figure 1 shows a breakdown of the con-tribution of the various components of GDP growth in Q3 and Q4 2012. Although the 3.1 percent top-line GDP growth in Q3 2012 was much higher than the growth in Q4, the underlying fundamentals were stronger in Q4.

Specifically:

• Over half of the growth in Q3 was attribut-able to increases in the rate of inventory accumulation and government spending (primarily federal defense spending). Rising inventories take away from future produc-tion, and the bump-up in defense spend-ing was not sustainable given the current budget environment.

• In Q4, the economy more than gave back the inventory accumulation and the rise in government spending. These two declines

11

shaved almost 3.0 percentage points off Q4 GDP growth.

• Particularly problematic in Q3 was the very slow growth in fixed business invest-ment, which was a drag on GDP growth. Business investment rebounded strongly in Q4, contributing 1.3 percentage points to GDP growth.

• Personal consumption expenditures grew slightly faster in Q4 than in Q3.

• The weakness of trade in Q4 at first looks a bit worrisome, but the decline in real exports reflects weakness in demand from US trading partners rather than falling US competitiveness. The decrease in real imports, which adds to GDP growth, is a

result of declining oil imports rather than an indication of a future slowdown in the US economy.

Whatever the strengths and weaknesses of the composition of growth in 2012, it was clearly not sufficient to ignite strong employ-ment growth. As shown in figure 2, employ-ment growth over the course of both 2011 and 2012 was slow—averaging 175,000 jobs per month in 2011 and 183,000 per month in 2012. Total employment still remains well below its pre-recession peak. As a result of the slow growth in employment, the unemployment rate is coming down very slowly (figure 3), and 12 million people are continuing to look for work three and a half years after the end of the recession.


Source: US Department of Commerce, Bureau of Economic Analysis

Figure 1. Contributions to percent change in real GDP Percentage point change


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inventories

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Q4 2012: 0.4%

Q3 2012: 3.1%

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The case for accelerating growth

One of the most significant improvements to the economic fundamentals in the United States has been the recovery in household net worth. Not only was current income impacted by the recession’s sharp uptick in unemployment, but assets of households also took a major hit as home values plummeted, leaving many homeowners with mortgage liabilities far above the value of their homes. After reaching a peak in Q3 2007, it took just a year and a half for household wealth to drop by almost one-quarter.

Now, as shown in figure 4, household wealth has almost returned to its pre-recession peak on a nominal basis. Significantly, the most recent increase in Q4 2012 coin-cided with debt levels rising for the first time since the recession, a sign of improving consumer confidence.

As household wealth continues to expand and ris-ing employment contributes income, one of the factors holding growth in check—the lagging rate of growth of household formation—should begin to reverse. The recession and the weak recovery have had a profound impact on social dynam-ics in this country, as poor economic condi-tions have caused the rate of new household formation to slow dramatically. Households form when a person or group moves into a separate living unit. During the recession and

its aftermath, this process slowed consider-ably. Rising unemployment and foreclosures took their toll, and people who would have otherwise formed an independent household were forced by economic necessity to move back in or remain with parents, other relatives, or friends.

Figure 5 tracks the growth in population and household formation, setting both series to 100 in December 2004. In the period before


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Figure 2. Changes in nonfarm employmentThousands

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Source: Bureau of Labor Statistics


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the recession, the rate of increase in the popu-lation age 16 and above closely tracked the rate of increase in the number of households formed. With the onset of the recession in December 2007, net new household formation came to a near standstill. Although the rate of household formation has recently started to increase, the United States currently has 1.1

million fewer households than it would have had if household formation had kept pace with population growth.

The strengthening of the housing market, visible in the rise in household wealth, declining “for sale” inventories, and rising home prices, are strong signals that the United States is close to working its way through the painful aftermath of the collapse of the housing bubble. The US econ-omy is approaching the tipping point where even a slowly improving employment situa-tion should be able to begin to unleash the pent-up demand represented by over 1 million additional potential households currently waiting in the wings. Not only will housing construc-tion and construction employ-ment be supported, but rising household formation should also kick off a virtuous cycle of rapidly increasing demand for home-related goods and services, which in turn should support additional employ-ment and more new household formation. A household forma-tion rate exceeding the rate of population growth is a formula

for accelerating economic growth.Looking toward the construction sector,

we are now seeing a sign that the resurgence is indeed underway: Housing is finally turning the corner. The uptick shown in figure 6 for the number of housing units currently under con-struction correlates well with the contribution of residential investment to GDP. After being


Source: Federal Reserve Board

Figure 4. Household net worthTrillions of $

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Source: Census Bureau and Bureau of Labor Statistics

Figure 5. Household formation and population


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a drag on growth for several years, residential investment reversed its trend and began to contribute to GDP growth in mid-2011, and it was a small net positive for 2012.

Political risk—muted temporarily

Recent actions by Congress and the White House in the name of deficit reduction will definitely result in slower growth than would otherwise have existed in 2013. However, because the actions are being implemented only in part and on a piecemeal basis, they are more likely to slow the rate of acceleration rather than stopping it or caus-ing an actual contraction. The original fis-cal cliff date of January 1, 2013, represented the combination of the expiration of a series of temporary tax provisions—including the Alternative Minimum Tax limits, the Bush tax cuts, and the 2 percent point decrease in the payroll tax—with the automatic spending cuts provided for by the Budget Control Act of 2011 (the sequester). To complicate things further, January 1 was also around when the Treasury would need an increase in the debt ceiling in order to pay bills already incurred. There is little doubt that if all the January 1 revenue increases and spending cuts had been allowed to take effect at once, the United States would currently be in or near recession-level per-formance. If a default had occurred due to an

unwillingness to raise the debt ceiling, reces-sion would have been guaranteed.

The fiscal cliff deal muted the economic impact of these measures by allowing only a portion of the expiration of the temporary tax reductions to stand—the payroll tax rose two percentage points to its former level, and taxes on the highest wage earners were allowed to return to pre-Bush tax cut levels—and delay-ing the sequester until March 1, 2013. The debt ceiling was also raised. Further, Congress averted a federal shutdown by agreeing to a spending plan before the March 27 expiration of the existing Continuing Resolution, keep-ing spending at sequester levels. It remains to be seen what the final resolution of the budget battles will be, but from the actions taken to date, the damage to the economy appears limited.

Source: US Census Bureau

Figure 6. Residential units under constructionThousands of units, SSA


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TheRe are indications that China’s recov-ery from the slow growth of 2012 is

weaker than anticipated. Data for January and February—the two months are combined due to the Chinese New Year—showed that industrial production and retail sales increased more slowly than expected. Industrial produc-tion in the first two months of the year rose 9.9 percent from a year earlier, the slowest start to the year since 2009. Retail sales for the first two months of the year were up merely 12.3 percent. The slowdown in retail spending was partly due to an official effort to curtail spend-ing on entertaining officials.

At the same time, exports and fixed asset investment are growing strongly, suggesting that China’s expansion is reverting to the old pattern of exports and investment rather than consumer spending. In the long term, this is not a sustainable pattern for China. Fixed asset investment was up 21.2 percent in the first two months of the year. In addition, exports in February were up 21.8 percent from a year earlier, even though there were four fewer working days in February this year than last. Imports actually declined in February, raising concerns that domestic demand is lagging.

Particularly noteworthy was a 16.5 percent increase in exports to the European Union (EU). This was the third consecutive monthly increase in exports to the EU, the first time this has happened since 2011. Exports to the United States were up 15.7 percent, and exports to Japan were down 6.5 percent.

Recent pessimism about the weak numbers for China’s manu-facturing sector was offset, how-ever, by more positive news. It was a relief to learn that a preliminary purchasing manager’s index for manufacturing was up. The index, published in March by Markit and HSBC, increased from 50.4 in February to 51.7, suggesting accelerating growth in the manu-facturing sector.1 In addition, inbound foreign direct investment (FDI) into China rose in February for the first time in nine months, with a 6.8 percent increase from a year earlier. Outbound FDI was up as well and exceeded inbound

CHINA

China: A slow recoveryby Dr. Ira Kalish

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GeographiesChina

FDI. The increase in inbound FDI signals a possible revival of foreign business confidence in China’s outlook.

The future of government policy

China’s new premier, Li Keqiang, made a surprisingly candid speech about what is needed for China to move forward. He said

that he wants to reduce the power of the Chinese government and increase the role of the private sector in the economy. According to Li, “It’s about cutting power, it’s a self-imposed revolution. It will be very painful and even feel like cutting one’s wrist.”2 He backed up his statements by appointing an economic policy team composed of respected and experienced reformers. Li also made a strong statement about dealing with pollution: “We shouldn’t pursue economic growth at the expense of the environment—such growth won’t satisfy the people.”3 At a time when smog in Beijing and elsewhere is seen as a significant threat to pub-lic health, Li’s statement was welcome.

In addition, the head of China’s central bank, Zhou Xiaochuan, indicated that he is worried about rising inflation, which reached 3.2 percent in February. He says that the bank’s policy is “no longer relaxed” and “relatively neutral.”4 Zhou said that “we will use mon-etary policy and other measures to hopefully stabilize prices and inflation expectations.”5 This statement comes at a time when China’s economy is showing signs of sputtering, with industrial production rising more slowly than had been anticipated. However, the central bank is concerned about consumer prices in addition to a possible housing bubble and the rise of non-bank sources of credit. Zhou also expressed concern that some loans to regional governments are not backed by revenue-generating projects and are, therefore, at risk. The central bank set its money supply growth target at 13 percent, which would be the slow-est rate of money supply growth since 2000. Zhou is the longest-serving head of China’s central bank and, despite reaching the age of 65, is widely expected to be retained after the mandatory retirement age. He has been instrumental in pushing the liberalization of credit markets. His comments suggest that he wants to stabilize prices and the financial

17


system before he departs. For the government, the challenge will be to keep growth going in the midst of a tighter monetary policy.

Meanwhile, Moody’s chimed in with a warning that China’s local government debt is at risk of default. This follows the central bank’s assessment that there might be trouble. According to Bloomberg, local government debt issuance increased by 179 percent from 2011 to 2012 and accounted for 50 percent of corporate bond issuance in China in 2012.6 It is estimated that local government debt amounts to 18-30 percent of China’s GDP. As local gov-ernments cut back on borrowing, this could have a negative impact on economic growth.

Another issue in China concerning credit growth has been the very rapid expansion of the so-called shadow banking system. This has involved the creation of credit outside the formal banking system, often using off-balance-sheet vehicles operated by traditional banks. The huge growth of this system played an important role in the country’s economic recovery after the global crisis of 2008–2009, but its large size and lack of supervision worry many observers. They are concerned that the system poses a risk to the economy. Consequently, the Chinese government recently announced that it will require fuller disclosure about off-balance-sheet vehicles operated by banks. It will also consider rules that would cap the size of such vehicles. Such rules could curtail credit growth.

Dealing with income distribution

Finally, an important policy issue concerns the rising inequality of income in China. The country currently has a system of residence permits known as the hukou system. The per-mits indicate where people reside and whether they are urban or rural. Many rural migrants live in big cities, but they are not entitled to many of the services enjoyed by local residents because they are classified as rural. These services can include education and health care. As such, China has developed a two-tiered system that is a source of considerable tension and potential unrest. Now there is word that the new leadership intends to do away with the hukou system and replace it with a system of national residence permits. The idea is to end the two-tier system and to encourage more rural people to permanently settle in urban areas. Outgoing Premier Wen Jiabao says that promoting urbanization will assist with con-tinued strong economic growth. The transition to a more consumer-led economy will require more urban dwellers with greater purchas-ing power. The challenge, of course, will be to fund the added government services that will become available to migrants.

China’s new premier, Li Keqiang, made a surprisingly candid speech about what is needed for China to move forward. He said that he wants to reduce the power of the Chinese government and increase the role of the private sector in the economy.

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GeographiesChina

1. Chris Williamson, “Flash Manufacturing PMI rebounds to signal strengthening upturn,” Markit Economic Research, March 21, 2013, http://www.markit.com/assets/en/docs/commentary/markit-economics/2013/Mar/China_flash_PMI_13_03_21.pdf, accessed April 15, 2013.

2. Bloomberg News, “Li urges paring state role to fuel 7.5% China growth,” March 18, 2013, http://www.bloomberg.com/news/2013-03-17/china-s-li-vows-to-keep-7-5-growth-and-spread-wealth-benefits.html, accessed April 15, 2013.

3. Ibid.

4. Bloomberg News, “Zhou on high alert prompts swaps PBOC rise signal,” March 24, 2013, http://www.bloomberg.com/news/2013-03-24/zhou-on-high-alert-prompts-swaps-pboc-rise-signal.html, accessed April 15, 2013.

5. Ibid.

6. Kyoungwha Kim and David Yong, “Moody’s sees defaults as PBOC warns on local risks,” Bloomberg, March 18, 2013, http://www.bloomberg.com/news/2013-03-17/moody-s-sees-defaults-as-pboc-warns-on-local-risks.html, accessed April 15, 2013.

19

In the last Global Economic Outlook, we said that “the outlook for Japan is poor.” This is no

longer the case. In fact, the outlook for Japan has changed substantially as a result of actions following the recent election. There is now a significant chance that Japan’s economic per-formance will be much better than almost any-one expected just a month ago. What changed?

Following the landslide election of a gov-ernment led by the Liberal Democratic Party, party leader Shinzo Abe promised to engage in substantially new policies. Specifically, there are three main elements to his plan.

First, Abe intends to move the Bank of Japan toward a much more aggressive policy. He has already appointed new leadership to the bank, which intends to engage in unlim-ited asset purchases until it achieves its new target of 2.0 percent inflation. Currently, there is deflation, which means that prices continue to decline. The problem with deflation is that it causes consumers to delay purchases, which in turn discourages businesses from invest-ing. In addition, declining prices increase real interest rates. Thus, the cost of capital is higher than the nominal interest rate suggests. Finally,

declining prices lead to an increase in the real value of debts. A combination of deflation and slow economic growth is the proximate cause of the huge increase in Japan’s sovereign debt-to-GDP ratio. Thus, a policy of creating inflation makes sense. Whether it can easily be achieved remains a question. Yet, in anticipation of the new policy, the Japanese yen has dropped sharply in value. Plus, anticipation of the inflationary effects of the new policy has resulted in rising equity prices in Japan.

Second, Prime Minister Abe intends to engage in more fiscal stimulus. This means he will not worry (as previous governments have) about the level of debt. Instead, he hopes to stimulate growth in order to eventually cause a drop in the debt-to-GDP ratio. He has announced the first tranche of what is expected to be several increases in spending.

Japan: A new regimeby Dr. Ira Kalish

JAPAN

20

GeographiesJapan

Third, Abe intends to have Japan participate in the Trans-Pacific Partnership negotiations aimed at creating a Pacific-area free-trade agreement. The main aspect of this would be freer trade with the United States. With the exception of agricultural products, most trade between Japan and the United States does not involve high-tariff barriers. Instead, there are non-tariff barriers, which often involve restric-tive regulations. As such, freer trade between Japan and the United States would necessarily entail deregulation of many domestic indus-tries in Japan—and that is the point. Abe’s push

for freer trade is a way to achieve political sup-port for market-opening reforms.

Early signs of progress

Has the new policy regime made a differ-ence? The answer is yes and no. The drop in the yen has not yet led to a boost in export growth. But it will, eventually. It usually takes some time for an exchange rate movement to have an impact on the volume of trade. Continued weakness in exports is reflected in continued weakness in industrial production. Yet again, this is likely to change when the effects of a

21

lower yen work their way through the econ-omy. The increase in equity prices, combined with expectations of higher inflation, evidently had an impact on consumer spending, which increased at a healthy pace in both January and February. Given the fundamentals, this was not expected. In addition, the well-known Tankan Survey found an increase in busi-ness confidence, but capital spending plans remain static.1

What to expect

Will the new policy regime work? It is not yet clear, but the reaction of financial mar-kets is promising. Rising equity prices and a declining yen will likely bear fruit. The prob-lem, however, is that the new monetary policy may not necessarily achieve higher inflation. Many observers are concerned that Japan’s economy is running so far below capacity that inflation of 2.0 percent cannot be achieved within the two years that the Bank of Japan

expects. The concern is that huge asset pur-chases by the bank will simply create asset price inflation (which is already happening) and will not result in the inflation needed to change economic behavior. On the other hand, consumer behavior has already started to change in response to a new policy regime. Moreover, the fiscal stimulus could bear fruit if implemented quickly.

However, other obstacles to growth are lingering. Japan faces growing competition from companies in South Korea, Taiwan, and China in its core industries of electronics and automobiles. It also faces a relatively weak level of global demand, especially in Europe. Thus, the potential for export growth, even with a cheaper yen, is limited. The new policies will need to have a sustained impact on domestic demand in order to significantly boost growth. The early impact on consumer spending is a good sign, but it remains too early to tell whether the policy will succeed.


1. Bank of Japan, “Tankan,” http://www.boj.or.jp/en/statistics/tk/, accessed April 15, 2013.

Will the new policy regime work? It is not yet clear, but the reaction of financial markets is promising.

22

GeographiesJapan

23

The Indian economy is operating in a dif-ficult macroeconomic environment, part

of which is due to a prolonged period of weak-ness in the global economy. Moreover, a host of domestic factors caused an economic decelera-tion. As a result, the Indian economy is expe-riencing one of its slowest periods of growth in nearly a decade. India’s GDP grew just 5.5 percent and 5.3 percent in the first two quar-ters of the 2012–2013 fiscal year, prompting the Central Statistical Organization to lower its growth estimate to a meager 5.0 percent for the year as a whole. While the Ministry of Finance’s and Reserve Bank of India’s estimates for GDP growth are slightly higher, the bottom line is that the Indian economy will slow down

considerably from a growth rates of 9.3 percent and 6.2 percent achieved during 2010–2011 and 2011–2012, respectively.

Slower GDP growth is primar-ily attributable to a weakness in the industrial sector. The Index of Industrial Production grew a mere 0.7 percent between April and December 2012, down from 3.7 percent for the corresponding period in 2011–2012. Meanwhile, growth in the agriculture sector has been slow after an erratic start to the monsoon season, which likely caused lower growth in

INDIA

Pralhad Burli is senior analyst at Deloitte Re-search, India

India: Citius, altius, fortius by Pralhad Burli

24

GeographiesIndia Geographies

allied sectors as well. Furthermore, cautious monetary policy and tight credit conditions put a lid on the possibility of an investment-led growth revival. However, India’s growth rate appears to have bottomed out, and the tide is likely to turn in India’s favor. The government and policy makers exude confidence that the economy will bounce back. In all likelihood, growth will be faster, investments will be

higher, and the domestic economy will emerge stronger in the coming months. Based on current forecasts, the economy is expected to achieve a growth rate of 6.1–6.7 percent in the fiscal year beginning in April 2013.

Maneuvering monetary policy

In its third-quarter monetary policy meet-ing held on January 29, the Reserve Bank of India (RBI) cut its policy rate by 25 basis points. This marked the first instance where the central bank tinkered with policy rate since April 2012, as opposed to its reliance on con-sistent cuts to the cash reserve ratio in an effort to add liquidity and enhance credit availability in the markets.

Meanwhile, inflation based on the whole-sale price index (WPI) persisted around 7-8 percent through the most part of the 2012–2013 fiscal year. However, WPI inflation fell to 6.6 percent in January 2013, its lowest level since December 2009. The declining trend in the WPI is certainly a positive sign for the economy, but a majority of the decline is due to a moderation in non-food manufactur-ing inflation. On the other hand, food prices remain elevated and are an area of concern. Unlike the previous year, when food infla-tion was mainly driven by higher prices of protein foods, the price of cereals has exerted upward pressure this year. An increase in the minimum support price for rice and wheat, coupled with supply-side bottlenecks, con-tributed to an increase in inflation for cereals. Rising food inflation has widened the gap between inflation measured using the WPI and the consumer price index (CPI) to over 4 percent in January 2013, primarily on account of the greater weight given to food items in CPI. India continues to witness double-digit CPI inflation, which stood at 10.8 percent

25

in January, following a reading of 10.6 in December 2012.

So far, the RBI has adopted a cautious monetary stance in an attempt to maintain a balance between containing inflation and managing liquidity requirements to sup-port growth. The RBI’s stance was also considered necessary amid deteriorating fiscal conditions and an uncertain global macroeconomic envi-ronment. However, a moderation in wholesale prices and the possibility of an improvement in the government’s fiscal situation give the central bank some flexibility to reduce interest rates in the near future. While the choice may not be easy, the RBI will certainly weigh the costs of slower growth against the possibility of an uptick in inflation.

A path to fiscal consolidation

The Indian economy benefitted signifi-cantly from increased government spend-ing in the post-financial-crisis era. However, central government fiscal deficits soared to 6.0 percent and 6.5 percent of GDP in 2008–2009 and 2009–2010, respectively. Fiscal consolida-tion began in 2010–2011, and a partial with-drawal of the fiscal stimulus and an economic recovery ensured that the fiscal deficit fell to 4.8 percent of GDP. However, GDP growth faltered in 2011–2012, and the fiscal deficit, once again, ballooned to 5.7 percent. Massive

expenditures on welfare programs; subsidies on food, fuel, and fertilizers; and a shortfall in tax and divestment receipts contributed to the government’s slipping fiscal projections in 2012–2013. Revised estimates peg the deficit at 5.2 percent of GDP, and the final level could be

marginally lower. India ran the risk

of its sovereign rat-ing being downgraded to junk status in the absence of a clear fiscal consolidation plan. In his budget speech, the finance minister reaffirmed a commit-ment to continue on the fiscal roadmap laid out during the last year that would limit India’s fiscal deficit to 4.8 percent of GDP during the 2013–2014 fiscal year through measures that largely rely on expenditure cuts and disinvestment proceeds. However,

the success of the fiscal consolidation plan is largely dependent on underlying assumptions, and the threat of a sovereign downgrade has not been entirely averted. The government was not able to meet its disinvestment target in the current fiscal year, and part of the reduc-tion in the fiscal deficit in 2013–2014 assumes ambitious disinvestment revenues of nearly $10 billion. Furthermore, the government is anticipating an increase in non-tax rev-enues, a large proportion of which is expected to come from telecom spectrum proceeds. Meanwhile, non-tax revenues in the current fiscal were also lower compared to the initial target. On the other hand, plan expenditures are slightly higher because of low base effects,


The government and policy makers exude confidence that the economy will bounce back. In all likelihood, growth will be faster, investments will be higher, and the domestic economy will emerge stronger in the coming months.

26

GeographiesIndia

27


but the government subsidy bill is expected to decline. The deregulation of diesel prices and the limit on subsidized LPG cylinders will help in curtailing the government’s expenditure on subsidies. However, if global crude prices rise due to geopolitical tensions, the government will have to make some tough policy choices in the face of an upcoming election.

The other deficit

Some experts contend that a persistent deficit on the current account poses a big-ger challenge for the Indian economy. India’s current account deficit rose to 5.4 percent of GDP in the second quarter of the 2012–2013 fiscal year, taking the deficit to 4.6 percent for the first half of 2012–2013. Export growth fell faster than imports during the second quarter. Moreover, the import bill was partly buoyed

by increasing gold imports. As a countermea-sure, the government increased the tariff on gold imports from 4 percent to 6 percent in order to make gold imports more expensive. However, gold imports are expected to decline significantly only when households find other investments more attractive.

So far, the current account deficit has been financed without drawing down reserves. While foreign direct investments have declined in the first three quarters of 2012–2013 com-pared to the previous year, foreign portfolio investments have registered a healthy increase. Earlier, the government’s plan to implement the General Anti-Avoidance Rules (GAAR) increased concerns for foreign investors that led to substantial capital flight. After due consideration, the government decided to implement a modified version of the GAAR. A global recovery and an uptick in external

28

1. Raghuram G. Rajan, “An introduction to the economic survey 2012–13,” Ministry of Finance, India, http://www.indiabudget.nic.in/es2012-13/intro_economicsurvey.pdf, accessed April 15, 2013.

GeographiesIndia

The Indian economy is showing early signs of a recovery, suggesting that the worst may be over.

demand will likely support a revival in the export sector, which augurs well for the economy. However, India’s import basket, which consists largely of petroleum imports, will likely continue to exert pressure on the country’s current account.

Will India capitalize?

India’s once-agrarian economy suddenly turned to the services sector in its pursuit of an ample growth engine. While its transi-tion from agriculture to services led to high economic growth, it also left the manufactur-ing sector underdeveloped. More than half of India’s population engages in agriculture, and the high-productivity services sector is not creating enough jobs for a growing workforce. Currently, India has an opportunity to move a large proportion of its workforce from low-productivity sectors such as agriculture to high-productivity sectors like manufacturing, and enhance agricultural productivity while reducing the number of people dependent on agriculture. In a recent economic survey,

the chief economic advisor, Raghuram Rajan, highlighted that creation of productive jobs will be crucial for India’s long-term growth.1 Investments in education, skill building, and infrastructure, coupled with business-friendly regulations and labor laws, are levers that could potentially create an enabling environ-ment that propels the Indian economy to higher growth.

The Indian economy is showing early signs of a recovery, suggesting that the worst may be over. The purchasing manager’s index indicates an expansion, WPI inflation is on a downward trend, and the buoyancy of equity markets and portfolio investments underscore the return of investor confidence. Furthermore, the govern-ment hopes that its recent push for reforms will help trigger investments and jumpstart the economy. Overall, the Indian economy is expected to perform better in the coming year, which is a positive sign amid a host of macro-economic challenges. If the global economic recovery surprises on the upside, India’s growth forecasts will likely be revised upward.

29

ToDAy most of the world’s rich countries are running rather large budget defi-

cits. In some cases, the deficits are unusually large and have led governments to engage in painful austerity in order to bring the deficits under control. In others, such as the United States and Japan, little is being done to rein in deficits, and such inaction appears not to have done any harm. Thus, the question arises as to whether we should worry about deficits, and, if so, why? In what follows, we examine why some people hate deficits, others love them, and many simply don’t care.

Prehistoric deficits

First, consider a little history. In the old days before the post-war era, deficits were gen-erally seen as a bad thing. Certainly countries in recession ran deficits, but often, countries went to considerable lengths to avoid accumu-lating debt. Those that did not rein in defi-cits often were unable to service their debts, and defaults were not unusual. However, the experience of the Great Depression, in which

fiscal tightening was seen to worsen an already onerous economic downturn, led to new thinking about deficits.

The Keynesian critique was that, when a country is producing below its capacity, a debt-financed expansion in government spend-ing would be a suitable way to boost output. Moreover, when the private sector hoards cash, the government could borrow that cash, spend it, and boost output. This view took hold of economic thinking in the immediate post-war era and found favor with policy makers in the 1960s. By the end of the 1960s, Richard Nixon was quoted as saying “we’re all Keynesians now.” Yet, the Keynesians seemed to have taken their views too far, believing that deficits could permanently increase growth. They could not.

Deficits: Why all the fuss?by Dr. Ira Kalish

30

Topic

The backlash

By the mid-1970s, support for Keynesian stimulus abated as inflation became a greater worry. There was talk of “stagflation,” in which the economy stagnated but inflation endured. OPEC oil price shocks contributed to the inflation, but attitudes toward deficits changed. At that time, the main criticism of deficits was that they “crowd out” investment and slow economic growth. That is, when the government borrows in competition with the private sector, it drives up interest rates, hurts investment, and ultimately slows the economy.

There was debate about the degree of crowd-ing out and whether it is a problem when the economy is operating below capacity. In any event, the theory of crowding out suggested that, in the long term, deficits could do much harm. Indeed, they were blamed by some for the stagnation of the 1970s.

In the 1980s, Ronald Reagan came to power in the United States by attacking deficits. Yet he adopted a theory popular among some Republicans that tax cuts would pay for themselves by boosting work effort and invest-ment. His large tax cut in 1981, followed by large increases in defense spending, wound

Deficits: Why all the fuss?

31

up resulting in very big deficits. Evidently, the tax cuts did not pay for themselves, but they did boost private sector spending in the way Keynes suggested. Yet, given that large deficits did not appear to be doing much harm, an old theory was revived, suggesting that deficits are not a problem. The old theory, known as “Ricardian equivalence,” was based on the work of 19th-century British economist David Ricardo, who said that when the government borrows, individuals will increase their savings in anticipation of higher future taxes needed to service the debt. The higher saving would enable continued funding of investment. As such, there would be no “crowding out.” At the same time, higher savings would mean that consumers would spend less. Consequently, there would be no Keynesian stimulus. In other words, the deficit would make no differ-ence either way. Conservative Harvard econo-mist Robert Barro adopted the Ricardian view and provided statistical evidence in support of this view. Even Reagan adopted the view, say-ing that it made no difference whether the gov-ernment taxed or borrowed to fund spending.

Recent history

Still, the world was not totally convinced. After Reagan, George H.W. Bush and Bill Clinton both implemented tighter fiscal policies (higher taxes, reduced spending) that ultimately led to budget surpluses. As Clinton’s Treasury Secretary Robert Rubin argued, fiscal probity would create a more stable financial market environment, boost business confi-dence, and allow for a strong economy. This turned out to be true in the late 1990s. On the other hand, under George W. Bush, the United States returned to structural deficits in the 2001–2008 period, and growth continued at a reasonable pace.

Where do things stand today? In Europe, governments adopted tighter fiscal policies, which are widely seen as having inhibited economic growth. The United States had a more neutral fiscal policy, and growth has been stronger. There has been no crowding out given that the private sector is hoarding cash. The government is clearly not competing with the private sector for scarce funds. This supports the Keynesian view. On the other hand, the fiscal stimulus in 2009–2010 was accompanied by a sizable increase in private sector savings and a less-than-expected boost to growth. This would seem to support the Ricardian view.

Where do we go from here?

Few pundits, and fewer politicians, will say that we should not worry about deficits. The reality may be, however, that deficits are, at the least, harmless when the economy is weak and should be avoided when the economy is strong. For the United States, that probably means not focusing on the current deficit but attempt-ing to do something now about future deficits. For Europe, it probably means slowing the pace of austerity and focusing first on restor-ing economic growth. Of course, very large long-term deficits should always be avoided. When interest payments become too large, deficits grow out of control, the debt-to-GDP ratio grows out of control, and either default or ruinous inflation becomes much more likely. Finally, when countries don’t control their own money supply (as in the Eurozone) or borrow in foreign currencies, the risk associated with their accumulation of debt is far higher, lead-ing to high interest costs if financial markets become worried. Thus, their ability to engage in fiscal stimulus is severely limited.


32

TopicDeficits: Why all the fuss?

33

Appendix

75

80

85

90

95

100

1.2

1.3

1.4

1.5

1.6

1.7

Jun 09

Sep 09

Dec 09

Mar 10

June 10

Sep 10

Dec10

Mar 11

Jun11

Dec11

Mar 12

Jun 12

Sep 12

Dec12

Sep 11

-4

0

4

8

12

16

Jul 09

Nov 09

Mar 10

Jul 10

Nov 10

Mar 11

Jul11

Nov 11

Mar 12

Jul 12

Nov 12

-4

-2

0

2

4

6

Jul 09

Dec 09

May 10

Oct10

Mar 11

Aug 11

Jan 12

Jun 12

Nov 12

-15

-10

-5

0

5

10

15

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Q1 12

Q2 Q3 12 12

Q4 12

-12

-10

-8

-6

-4

-2

0

2

4

6

8

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Q1 12

Q2 Q3 12 12

Q4 12

US JapanUK Eurozone Brazil RussiaChina India

Brazil RussiaChina IndiaUS JapanUK Eurozone

GBP-USD Euro-USD USD-Yen (RHS)

USD-Yen

*Source: Bloomberg

GDP growth rates (YoY %)*

Major currencies vs. the US dollar*

GDP growth rates (YoY %)*

Inflation rates (YoY %)* Inflation rates (YoY %)*


34

Appendix

Yield curves (as of March 14, 2013)*

US Treasury bonds & notes

UK gilts

Eurozone govt. benchmark

Japan sovereign

Brazil govt. benchmark

China sovereign

India govt. actives Russia‡

3 months 0.09 0.42 0.03 0.04 7.21 2.70 8.09 5.43

1 year 0.14 0.18 0.10 0.06 7.96 2.76 7.80 5.71

5 years 0.87 0.83 0.45 0.12 9.41 3.30 7.90 6.56

10 years 2.03 1.96 1.47 0.63 9.69 3.60 7.87 7.35

Composite median GDP forecasts (as of March 15, 2013)*

US UK Eurozone Japan Brazil China Russia

2013 1.9 0.9 -0.2 1.2 3.35 8.1 3.4

2014 2.7 1.6 1.1 1.3 4 8 3.75

2015 2.95 2 1.5 1.3 3.55 7.9 4.3

Composite median currency forecasts (as of March 15, 2013)*

Q2 13 Q3 13 Q4 13 Q1 14 2013 2014 2015

GBP-USD 1.53 1.52 1.52 1.53 1.52 1.55 1.57

euro-USD 1.32 1.31 1.3 1.26 1.3 1.28 1.3

USD-yen 94 95 95 95 95 100 102

USD-Brazilian Real 1.98 1.98 1.98 2 1.98 2.05 2.16

USD-Chinese yuan 6.18 6.15 6.11 6.1 6.11 6.03 6

USD-Indian Rupee 54 53.5 53 53 53 50.5 50

USD-Russian Ruble 30.29 30.24 30.37 30.43 30.37 32.21 32.51

OECD composite leading indicators (amplitude adjusted)†

US UK Eurozone Japan Brazil China India Russia Federation

mar 11 100.65 101.46 101.68 100.56 101.03 101.52 100.57 102.81

Apr 11 100.57 101.32 101.57 100.49 100.75 101.43 100.28 102.59

may 11 100.42 101.09 101.40 100.39 100.38 101.35 100.01 102.36

Jun 11 100.20 100.78 101.17 100.31 99.92 101.26 99.81 102.17

Jul 11 99.97 100.40 100.90 100.26 99.45 101.15 99.68 102.03

Aug 11 99.79 99.99 100.62 100.22 99.02 101.02 99.57 101.96

Sep 11 99.72 99.62 100.37 100.21 98.67 100.89 99.49 101.96

oct 11 99.79 99.33 100.17 100.26 98.42 100.74 99.44 102.02

nov 11 99.97 99.18 100.03 100.34 98.27 100.59 99.45 102.11

Dec 11 100.20 99.16 99.96 100.43 98.28 100.43 99.44 102.19

Jan 12 100.41 99.22 99.92 100.52 98.41 100.32 99.38 102.20

Feb 12 100.55 99.31 99.89 100.56 98.66 100.23 99.29 102.09

mar 12 100.61 99.40 99.86 100.55 98.90 100.10 99.16 101.75

Apr 12 100.60 99.48 99.79 100.48 99.09 99.93 99.03 101.16

may 12 100.54 99.56 99.70 100.36 99.22 99.79 98.88 100.46

Jun 12 100.47 99.68 99.60 100.23 99.34 99.69 98.68 99.81

Jul 12 100.44 99.84 99.49 100.12 99.43 99.62 98.42 99.36

Aug 12 100.47 100.03 99.41 100.05 99.47 99.55 98.18 99.14

Sep 12 100.56 100.23 99.36 100.05 99.48 99.45 97.99 99.06

oct 12 100.67 100.42 99.37 100.10 99.45 99.35 97.80 99.10

nov 12 100.77 100.55 99.45 100.21 99.41 99.25 97.57 99.23

Dec 12 100.86 100.62 99.58 100.38 99.39 99.13 97.35 99.41

Jan 13 100.94 100.63 99.74 100.58 99.39 99.02 97.15 99.65

*Source: Bloomberg ‡mICeX rates †Source: oCeD

note: A rising CLI reading points to an economic expansion if the index is above 100 and a recovery if it is below 100. A CLI which is declining points to an economic downturn if it is above 100 and a slowdown if it is below 100.

35


Additional resources

Deloitte Research thought leadership

Deloitte Review Issue 12

Asia Pacific Economic Outlook: China, India, Myanmar, Philippines.

Please visit www.deloitte.com/research for the latest Deloitte Research thought leadership or contact Deloitte Services LP at: [email protected].

For more information about Deloitte Research, please contact John Shumadine, Director, Deloitte Research, part of Deloitte Services LP, at +1 703.251.1800 or via e-mail at [email protected].

36

Appendix

Contact informationGlobal Economics TeamRyan AlvanosDeloitte ResearchDeloitte Services LPUSATel: +1.617.437.3009e-mail: [email protected]

Pralhad BurliDeloitte ResearchDeloitte Services LPIndiaTel : +91.40.6670.1886e-mail: [email protected]

Dr. Alexander Börsch Deloitte ResearchGermanyTel: +49 (0)89 29036 [email protected]

Dr. Patricia Buckley Deloitte ResearchDeloitte Services LPUSATel: +1.517.814.6508e-mail: [email protected]

Dr. Ira KalishDeloitte ResearchDeloitte Services LPUSATel: +1.213.688.4765e-mail: [email protected]

U.S. Industry LeadersBanking & Securities and Financial Services

Robert ContriDeloitte LLPTel: +1.212.436.2043e-mail: [email protected]

Consumer & Industrial ProductsCraig GiffiDeloitte LLPTel: +1.216.830.6604e-mail: [email protected]

Life Sciences & health CareBill CopelandDeloitte Consulting LLPTel: +1.215.446.3440e-mail: [email protected]

Power & Utilities and energy & Resources

John McCueDeloitte LLPTel: +216 830 6606e-mail: [email protected]

Public Sector (Federal)Robin LinebergerDeloitte Consulting LLPTel: +1.517.882.7100e-mail: [email protected]

Public Sector (State)Jessica BlumeDeloitte LLPTel: +1.813.273.8320e-mail: [email protected]

Telecommunications, media & Technology

Eric OpenshawDeloitte LLPTel: +1.714.913.1370e-mail: [email protected]

Global Industry LeadersConsumer BusinessAntoine de RiedmattenDeloitte Touche Tohmatsu LimitedFranceTel: +33.1.55.61.21.97e-mail: [email protected]

Energy & ResourcesCarl HughesDeloitte Touche Tohmatsu LimitedUKTel: +44.20.7007.0858e-mail: [email protected]

Financial ServicesChris HarveyDeloitte LLPUK Tel: +44.20.7007.1829e-mail: [email protected]

Life Sciences & Health CarePete MooneyDeloitte Touche Tohmatsu LimitedUSATel: +1.617.437.2933e-mail: [email protected]

ManufacturingTim HanleyDeloitte Touche Tohmatsu LimitedUSATel: +1.414.977.2520e-mail: [email protected]

Public SectorPaul MacmillanDeloitte Touch Tohmatsu LimitedCanadaTel: +1.416.874.4203e-mail: [email protected]

Telecommunications, Media & Technology

Jolyon BarkerDeloitte & Touche LLP UKTel: +44 20 7007 1818e-mail: [email protected]

37

38

39

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