Week 1 Flashcards
Volume of World Merchandise Trade
above the pre covid level
Merchandise Exports / Imports
CIS -> Russia / -stan States
Asia is still leading the exports
World Merchandise Trade Volume & GDP Growth
Trade Volume growth / Real GDP growth back at the pre covid level
Global Purchasing Manager Index (PMI)
How much raw materials are being bought?
-> forward indication of what are the expectation of the economy
FDI Fragmentation / Rising Restrictions
Lest decade:
More trade restricitions, isolation
1990 – 2010: Globalisation, reduction of trade barriers
Global FDI
Global FDI inflows slightly increased year-over-year in 2022
Growth Projections
Emerging markets and developing economies have much higher growth forecasts than advanced economies
Inflation
Inflation is coming down, but the pace of disinflation is slowing
Wage-Price Spiral Risk
Real wage growth recovery mostly due to declining inflation
Drivers of Uncertainty
Economic Outlook
- Growth is hampered by the ongiong conflict in the Ukraine, lingering post-pandemic effects, and concern over disruptions caused by politival polarization, climate change, a looming energy crisis, and inflation.
- Inflation will slowly decline
- slowdown is concentrated in advanced economies
- Switzerland enjoys a robust, competitive, service-driven economy with a strong democratic tradition, and supported by export-oriented SMEs.
Global Risks
Long term:
Enviromental risks are out of our control
It’s for all the same
-> it doesn’t matter how much money we have to fix it
Short term:
Cost of living crisis
-> real wages
Crisis
-> possibly the end of something
Top 10 Risks
Geostrategic Outlook
- War in Ukraine: more sanctions, supply chain disruptions, higher prices
- China-Western decoupling: divergent growth / investement opportunities, increased reputational and compliance risk, supply chain reorientation
- Geopolitical swing states: strategic investment opportunites, supply chain alternatives
- Hardening of technology blocs: IP protection complexity, adapting supply chains
- focus on economic self-sufficiency: reduce growth, increaced inflation
- Energy security imperative: tax rate volatility & divergence
- Mulitspeed ESG policies: ESG suppy chain strategy
- Inflation-recession paradox: higher cost of credit, risk of higher taxes, customer vulnerability
- Food insecurity and instability: Human capital challenges
- Latin America’s left-leaning geovermentens: finance & revenue risks for mining sector
Trends to Watch
- Western central bank raise interest rates still further to battle inflation
- the inflation crisi hturts shoppers and retailers
- Covid-19 takes many more lives
- Asia’s appetite for energy helps push global oil demand
- recession risks and rate increases do not prevent tech spending rising more than 6%
- Straeming firms continue to invest heavily in content
- Globla sales of new cars growth by jsut 1%, but htose of electric vehicles increased 25%
- America, the world’s biggest defence spender, boost annul outlay
- Broad gauges of commodity prices retreat (Rohstoffpreise auf breiter Front rückläufig)
- Air travel turns profitable as international arrivals soar by 30%
Switerzerland GDP
Switzerland Consumer Sentiment
Emerging market:
Things can get better in the future
Mentalty
Advanced economies:
We are leading, it can’t be could forever
Worried about: Healthcare, Pension
-> physical wellbeing
Switzerland Economic Forecast
steady but slow growth
International Activites fo Swiss SME’s
focus on Europe, America, Northeast Asia
Switzerland SME Internationalization process
- they use often direct exports
- susidiary are the most successfull
Economic Trends for Switzerland
- Slowdown in economic growth
- Financial sector caught in a vice ( Schraubstock gefangen)
- Tourism industry still not back to normal
- Swiss pharma balances innovation and cost
- Multionational companies in the ESG crosshairs: continue to be on the defesice over decisions to operate in countries such as Russia
- Machine industry bracing for hard times: free movement of people, scientific collaborations
- Watchmaking set for growth
PESTEL Int Bus
P: trade agreements
E: industiralization and development of markets and economies and integration of global markets
T: automation, digitalization, AI, IoT
S: Sustainability, wellness, global aging population
E: climate change
Five Trends, which may transform the world
-> India
- Most populos country will be India, compusition of the Indian population, largest working-age group -> demographic dividend
- Will India be able to capitalise on this opportunity? -> greater producitivtiy
Obstacles:
* 90% of the jobs are informal, irregular salary, social security
* 20 % of the of working age are actually working -> not high enough education to work in a office
* Indian government Make India campaign to entice foreign investment
* countries infrastructure and the state of its workforce remain a barrier, no formal training, health issues
China:
* China population boom, after one child policy, big working-age society an d fewer children to raise providing the man-power for the China’s extraordinary expansion
* foreign companies factories set uü
Five Trends, which may transform the world
-> party drugs for menthal health
-> Psychedical medicine
- psychedelic-assisted therapy
- treatments with the MDMA
- MDMA makes therapy much more effective
- magic mushroom, trial for a therapy
- Ketamine therapy for alcohol disorder
Five Trends, which may transform the world
-> Japan
- one counry which could make the global recession much worse
- third largest economy, biggest creditor country -> potenital to effect the worlds financial markets
- Japan’s central bank has keeping the intrest rates low thanks to low inflation
- as interest rates have riven elsewhere in the world Japan has found itself exposed by the widening gap
- Jen is less attracitve for investors, lower interest rates, lower return
- Jen has fallen against the dollar, making imports more expensive for Japan, which pushed up the rates of inflation
- low (0.25%) interest rates, 10 years bond, the yield on this bond is crucial in Japan, it effects a lot of economic activity, by keeping this interests rate low stimulate the economy ->
- End of 2022: the bank of Japan increased the cap to 0.5% -> distabilized the market
- In 2023 the bank might go even further
- If the interest rates in Japan climb the same way as in other countries it would be much more concerning because Japan has the highest level of public debt of any rich country -> if interest rates climb up, Japan might would not be able to service its debt and start to sell bonds causing bond yields to go up
Five Trends, which may transform the world -> Repairing the world
- recygling/repaired/reduce clothes (fashion brands)
- resell
- eco-friendly fashion
- circular economy -> 23% of the global fashion industry
- risk: greenwashing of companies
Five Trends, which may transform the world -> Colonial concerns
- 2023 Charles was crowned
- He wants queen camillato wore the crown that his grandmother wore at her coronation
- Kohinoor diamond which was taken from India in 1849
- For Indians it would be a massive diplomatic grenade
- repatriation of aritfacats of other countries, the people in the colonazied countries should see their art in their own country
- return artifacts to India -> New Delhi museum and Nigeria
- restitution = die Rückgabe
Economic mega threats
artifical intelligence
Artifical Intelligence
* is leading to dicplacement of routine jobs, then of more cognitive jobs, but know with ChatGPT even some creative job can be replaced
* increase income and wealth inequality because this industry is capital intensive, buyers and labour saving, low/ medium value added -> than you have to worry to be replaced
* Gepolitical issue -> two power US/China, AI race, dominate all the industry of the future, but also the military, security power
* Europe has to ally with the US -> same politcal/economical/gepolitical system
Top Risks
- Geopolitcal
- Control
- Operational
- Cyber
- Regulatory
Geopolitical
* relationship US, China -> Taiwan
* miscalculation risk is high
* reshoring, friend-shoring
Control
* conflict is unlikely, but trade/technology war
* competition in military technology
* spillover risk
Operational
* energy system, not only survive short term shocks -> renewable energy
Cyber
* agility, security, resilience
* emerging breakdown of global digital network
* weaponisation, clash of national interest, network resilient
Regulatory
* Turbulance felt around the world as government react to worsening economic conditions and increasing fiscal fragility
* corporate sector will feel the heat
* goverment interventions
Allianz Risk Barometer
- Cyber incidents
ransomware attacks. data beaches rank / everything connected, everythins is controlled by software - Business interruption
geopolitcal, economic risk, long-term transformation - Macroeconomic developments
high inflation, efforts by the central banks, energy crisis -> cost-of-living - Energy crisis
spiraling fuel costs, supply disruptions, effects Russa’s invasion - Changes in legslation and regualtion
growing corporate reporting, compliance, ESG - Natural catastrophes
Hurricane, storms - Climate change
adoping carbon reducing business models - shortage of skilled workforce
retaining skilled workers, talent shortage - Fire, explosion
wildfires -> insurance loss, usually technical, but also explosion beirut - Political risk and violence
Russia’s invasion of Ukraine, cost-of-living crisis, strike, terrorism law, administrative work
Economic mega threats
-> avoid recession
- Europe / Eurozone; energy crisis, high debt ratios, inflation, high public/ private debt
- try to dampen the impact of the rise of energy prices -> transfer money to those who are negatively affected, renewable energy, help the private sector
Economic mega threats
-> pandemic
Pandemic
* Global pandemics become more recurrent and more severe, it has to do with global climate change, we destroy the ecosystem of animals, we ecorach on them then those anmials that have pathogens are closer to humanbeings -> zoonotic transmission
* Permafrost in Siberia is defrosting and going to realse tons of methane and methane as 10 times geenhouse gas emissions than CO2 and then actually bacteria and virus haben been forzen in the permafrost > freakier pandemic
Economic mega threats
-> every trend is global
Every trend is global
* Global security -> great powers (China, Russia, Europe, USA) -> prevents the cooperation
on the key global issues
* China is a rising power, referred to revision is power that togehter with allies challenges the economic social, political, trading, financial, monetary, geopolitcal order that the US, Europe creadted after WW2
Economic mega threats
-> China
China
* Xi Jinping: become more authoritarian and state capitalism, state on banks/entreprises, government invest in infrastructure, geopolitical flexing their muscle, tensions, terretorial issue
* economic model is fragile: too much real estate, too much fixed investment, and credit fuel, the infrastructure spending, not enough domestic consumpition
* potential growth will be only 2-3% in the future
* before Xi Jinping more freedom, more liberalization
* China investements in Europe due to geopolitical reasons
* German is too dependent on China
