GattoYoung309 - International Planning & Research

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Transcript GattoYoung309 - International Planning & Research

Laying the Groundwork:
An Emerging Markets Overview
CMAG 42 at Cisco in San Jose
March 5, 2009
Joe Gatto and Jeff Young
[email protected] | [email protected]
International Planning & Research
www.iprcorp.com
Agenda and Summary of Highlights
• Market Characteristics
-
Market characteristics and economic measures can be used to prioritize/rank the huge
number of emerging markets. The BRIC are near the top, but others surface as well
• Economic Updates
-
BRIC countries are all being impacted by the worldwide recession, but there are key
differences that need to be comprehended in their assessment; these differences can be
tracked with timely data available from a variety of country/international sources
• Early Warning System
-
An early warning system “dashboard” with a common look and feel can help to
summarize and make digestible the vast amount of country-level tracking data for those
who need to know but don't have the time to take the deep dive
-
Beyond a “headlights” capability, statistical modeling of the relationship between IT
spending and underlying economic conditions leads to better business planning
• Appendix
What Makes an Emerging Market?
Growth
Rate
Sufficient Size
Emerging
Market
?
Level of
Economic
Development
Emerging Markets at a Glance: GDP
12%
Size of circle reflects size of economy in 2000 $USD at market rates
China
$2.4T
10%
2000-2008 CAGR
Vietnam
Ukraine
Romania
8%
Russia
India
Iran
N
Egypt
6%
4%
B
Libya
Peru
Turkey South
Africa
Venezuela
Czech
Republic
Argentina
Chile
Pakistan
Algeria
Colombia
Indonesia
Thailand
Philippines
Brazil
Hungary
Poland
Saudi
Arabia
Mexico
2%
0%
Malaysia
N = Nigeria
B = Bangladesh
$0
$2,000
$4,000
$6,000
GDP per Capita (2008)
Source: IPR Worldwide Economics/Demographics Database
$8,000
$10,000
Governance Indicators: Rule of Law
Percentile Rank
Chile
Czech Republic
Hungary
Malaysia
Poland
Saudi Arabia
South Africa
India
Turkey
Thailand
Egypt
Romania
Brazil
China
Argentina
Vietnam
Colombia
Mexico
Philippines
Libya
Ukraine
Indonesia
Peru
Algeria
Bangladesh
Iran
Pakistan
Russia
Nigeria
Venezuela
Based on 77 individual variables from 26 sources. Measures perceptions of the extent to which
agents have confidence in and abide by the rules of society, and in particular the quality of
contract enforcement, property rights, the police, and the courts, as well as the likelihood of
crime and violence.
0
10
Source: World Bank Governance Indicators
20
30
40
50
60
70
80
90
Gini Coefficients
Czech Rep.
Hungary
Ukraine
Pakistan
Romania
Bangladesh
India
Indonesia
Egypt
Poland
Algeria
Vietnam
Russia
Thailand
Iran
Turkey
Nigeria
Venezuela
China
Philippines
Malaysia
Mexico
Argentina
Peru
Chile
South Africa
Brazil
Colombia
Measure of income inequality. Coefficient of zero means
that everyone in the country has exactly the same income;
coefficient of 100 means that one person has all the
income, and no one else in the country has any.
0
Source: World Bank
10
20
30
40
50
60
Cell Phone Subscribers vs. GDP
Cell Phone Subscribers 100 Inhabitants (2007)
140
Czech
Republic
Saudi
Arabia
Ukraine
120
Russia
Poland
Romania
100
South
Africa
Algeria
80
Thailand
Hungary
Argentina
Malaysia
Turkey
Venezuela
Chile
Libya
Colombia
Philippines
60
40
Brazil
Mexico
Peru
Pakistan
Nigeria
China
Iran
Egypt
Indonesia
Vietnam
India
20
Bangladesh
0
$0
$2,000
$4,000
$6,000
GDP per Capita (2007)
Source: International Telecommunications Union, IPR Worldwide Economics/Demographics Database
$8,000
$10,000
Internet Users vs. GDP
60
Malaysia
Internet Users per 100 Inhabitants (2007)
Romania
50
Poland
40
Hungary
Iran
30
Chile
Peru
Ukraine
20
Vietnam
Pakistan
India
10
0
Czech Republic
Brazil
Colombia
Thailand
Saudi Arabia
Russia
China
Egypt
Algeria
Turkey
Venezuela
Mexico
South Africa
Philippines
Nigeria
Bangladesh Indonesia
$0
$2,000
Argentina
Libya
$4,000
$6,000
GDP per Capita (2007)
Sources: International Telecommunications Union, IPR Worldwide Economics/Demographics Database
$8,000
$10,000
Emerging Markets Scorecard
Rank in Parentheses
Weight
China
India
Russia
Saudi Arabia
Argentina
Turkey
Brazil
Poland
Mexico
Thailand
Malaysia
Indonesia
South Africa
Venezuela
Iran
Czech Republic
Egypt
Chile
Colombia
Pakistan
Peru
Romania
Philippines
Libya
Ukraine
Hungary
Algeria
Nigeria
Vietnam
Bangladesh
GDP $B
(2008)
50%
2,390 (1)
811 (2)
434 (5)
260 (8)
391 (6)
288 (7)
785 (3)
231 (10)
701 (4)
181 (12)
135 (16)
247 (9)
184 (11)
167 (13)
147 (15)
86 (21)
151 (14)
106 (20)
120 (17)
112 (18)
84 (22)
60 (27)
111 (19)
56 (28)
54 (30)
63 (26)
78 (23)
77 (24)
56 (29)
74 (25)
GDP/Capita
10%
1,796 (22)
707 (26)
3,083 (14)
9,217 (2)
9,622 (1)
4,005 (13)
4,089 (12)
5,992 (9)
6,375 (6)
2,759 (16)
5,343 (10)
1,041 (25)
4,204 (11)
6,313 (7)
2,224 (20)
8,436 (4)
1,848 (21)
6,436 (5)
2,673 (18)
667 (27)
2,871 (15)
2,708 (17)
1,201 (23)
9,063 (3)
1,180 (24)
6,308 (8)
2,314 (19)
555 (29)
647 (28)
480 (30)
2000-08
CAGR
20%
10.1% (1)
7.2% (3)
6.6% (5)
3.8% (27)
4.1% (26)
4.6% (19)
3.5% (28)
4.1% (25)
2.4% (30)
5.0% (15)
5.1% (14)
5.2% (13)
4.1% (24)
4.5% (21)
5.7% (11)
4.5% (22)
4.8% (17)
4.3% (23)
4.6% (18)
5.2% (12)
5.8% (9)
6.3% (8)
4.9% (16)
6.5% (7)
7.1% (4)
3.5% (29)
4.5% (20)
6.6% (6)
7.5% (2)
5.8% (10)
Rule of Law
5%
42 (14)
56 (8)
17 (28)
59 (6)
39 (15)
53 (9)
43 (13)
59 (5)
34 (18)
53 (10)
65 (4)
27 (22)
57 (7)
3 (30)
21 (26)
74 (2)
52 (11)
88 (1)
36 (17)
20 (27)
27 (23)
50 (12)
34 (19)
32 (20)
28 (21)
73 (3)
26 (24)
9 (29)
39 (16)
25 (25)
Gini
Coefficient
5%
45 (19)
33 (7)
40 (13)
NA
53 (23)
44 (16)
58 (27)
35 (10)
50 (22)
42 (14)
49 (21)
34 (8)
58 (26)
44 (18)
43 (15)
25 (1)
34 (9)
57 (25)
59 (28)
31 (4)
55 (24)
31 (5)
46 (20)
NA
28 (3)
27 (2)
35 (11)
44 (17)
37 (12)
32 (6)
Cell Phone
Subscribers
5%
41 (24)
20 (30)
115 (4)
115 (3)
102 (8)
83 (13)
63 (19)
109 (6)
64 (18)
80 (15)
88 (9)
35 (26)
87 (10)
86 (11)
42 (23)
128 (1)
40 (25)
84 (12)
74 (16)
48 (22)
55 (21)
107 (7)
59 (20)
73 (17)
120 (2)
110 (5)
81 (14)
27 (27)
27 (28)
22 (29)
Internet
Usage
5%
16 (20)
7 (25)
21 (15)
25 (11)
24 (12)
20 (19)
26 (10)
42 (4)
21 (14)
21 (16)
60 (1)
6 (28)
8 (24)
21 (17)
32 (7)
43 (3)
11 (21)
33 (6)
26 (9)
11 (22)
27 (8)
56 (2)
6 (27)
5 (29)
22 (13)
42 (5)
10 (23)
7 (26)
20 (18)
0 (30)
Weighted
Rank
100%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Stock Market Index Performance
52-Week Change as of March 1, 2009: Local Currency
0%
Mexico
Brazil
-40%
-41%
Turkey
Thailand
China
India
Poland
Saudi
Arabia
Argentina Russia
U.S.
Western
Europe
Japan
-25%
-50%
-45%
-46%
-51%
-51%
-53%
-53%
-57%
-75%
Sources: bloomberg.com (Saudi Arabia - TASI), MSCI Barra (Others)
-58%
-72%
-43%
-45%
Anatomy of a Meltdown
Changes in Forecast of 2009 GDP Growth between September 2008 and February 2009
10.0%
September Forecast 9.4%
9.4%
September to October
October to November
November to December
December to January
January to February
Forecast
Reductions
7.4%
7.5%
February Forecast 6.7%
6.3%
6.7%
5.8%
5.1%
5.0%
5.1%
4.1%
4.0%
4.0%
3.6%
2.1%
2.5%
1.8%
0.8%
0.0%
China
India
-0.7%
Russia
-2.5%
Sources: IMF, IPR
1.1%
0.4%
1.0%
0.0% Brazil
Argentina
Saudi Thailand Poland
Arabia
-1.5%
Turkey
0.6%
0.8%
-0.3%
Mexico
-1.6%
U.S.
-2.0%
Western -2.6%
Europe Japan
Spotlight on…China
GDP, CPI and Industrial Production Expressed as Change vs. Year-Ago
12%
GDP Quarterly History
12%
Largest Export Markets
GDP Annual Forecast
Exports = 35% of GDP (2008)
U.S.
10%
10%
8%
Hong
Kong
8%
6%
Japan
6%
4%
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08
Source: China National Bureau of Statistics
10%
2007
2008
2009
2010
2011
S. Korea
2012
Source: IPR WW Economics/Demographics Database
25%
Consumer Price Index
Source: CIA World Factbook (2008)
Industrial Production
20%
15%
5%
10%
5%
0%
Jan-07
Jan-08
Source: China National Bureau of Statistics
Jan-09
Jan-07
Jan-08
Source: China National Bureau of Statistics
Jan-09
Spotlight on…India
GDP, CPI and Industrial Production Expressed as Change vs. Year-Ago
GDP Quarterly History
10%
12%
GDP Annual Forecast
Largest Export Markets
Exports = 14% of GDP (2008)
U.S.
10%
8%
China
8%
6%
U.A.E.
6%
U.K.
4%
4%
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08
Source :India National Informatics Centre
15%
2007
2008
2009
2010
2011
2012
Source: IPR WW Economics/Demographics Database
15%
Consumer Price Index
Source: CIA World Factbook (2008)
Industrial Production
10%
5%
10%
0%
-5%
5%
Jan-07
Source: CSO- India
Jan-08
Jan-09
Jan-07
Source: CSO - India
Jan-08
Jan-09
Spotlight on…Russia
GDP, CPI and Industrial Production Expressed as Change vs. Year-Ago
10%
Largest Export Markets
GDP Annual Forecast
GDP Quarterly History
8%
Exports = 27% of GDP (2008)
Netherlands
6%
Italy
8%
4%
Germany
2%
6%
Turkey
0%
2007
2008
2009
2010
2011
2012
4%
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08
Source: Russian Federation on Statistics
-2%
Source: IPR WW Economics/Demographics Database
Consumer Price Index
17.5%
Source: CIA World Factbook (2008)
Industrial Production
15%
10%
5%
12.5%
0%
-5%
-10%
7.5%
-15%
Jan-07
Jan-08
Source: Russian Federation on Statistics
Jan-09
Jan-07
Jan-08
Source: Russian Federation on Statistics
Jan-09
Spotlight on…Brazil
GDP, CPI and Industrial Production Expressed as Change vs. Year-Ago
9%
GDP Quarterly History
8%
GDP Annual Forecast
Largest Export Markets
Exports = 12% of GDP (2008)
U.S .
6%
7%
Argentina
4%
5%
C hina
2%
Netherlands
3%
0%
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08
Source: Brazilian Institute of Geography and Statistics
10%
2007
2008
2009
2010
2011
2012
Source: IPR WW Economics/Demographics Database
Source: CIA World Factbook (2008)
Industrial Production
Consumer Price Index
10%
5%
0%
5%
-5%
-10%
0%
Jan-07
-15%
Jan-08
Source: Brazilian Institute of Geography and Statistics
Jan-09
Jan-07
Jan-08
Source: Brazilian Institute of Geography and Statistics
Jan-09
Spotlight on…United States
GDP, CPI and Industrial Production Expressed as Change vs. Year-Ago
GDP Quarterly History
4%
5%
Largest Export Markets
GDP Annual Forecast
Exports = 10% of GDP (2008)
C a na da
3%
2%
1%
M e xic o
0%
2007
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08
2008
2009
2010
2011
2012
-1%
C hina
J a pa n
-2%
-3%
Source: U.S. Bureau of Economic Analysis
7.5%
Source: IPR WW Economics/Demographics Database
10%
Consumer Price Index
Source: CIA World Factbook (2008)
Industrial Production
5%
0%
2.5%
-5%
-10%
-15%
-2.5%
Jan-07
Jan-08
Source: U.S. Bureau of Labor Statistics
Jan-09
Jan-07
Jan-08
Source: U.S. Federal Reserve
Jan-09
Decomposing Changes in U.S. GDP
Change vs. Prior Period ($B)
Personal Consumption
+ Non-Residential Investment
+ Residential Investment
+ State/Local Government
= Final Private Domestic Demand
+ Federal Government
+ Change in Inventories
+ Net Exports
= GDP
1H08
43
17
-42
7
25
23
-43
103
109
2H08
-171
-88
-37
0
-297
39
31
8
-219
Delta
-214
-105
5
-7
-322
16
74
-95
-328
Source: U.S. Bureau of Economic Analysis (Chained 2000 Dollars)
• GDP increased by $109B in 1H08 but declined by $219B in 2H08 – a swing of $328B
• Net exports accounted for almost all the gain in GDP for 1H08, but were practically flat in 2H08
• Contraction in economy for 2H08 due to collapse in final private domestic demand (primarily
personal consumption and non-residential investment), which dropped even more than GDP
• Residential investment was actually less of a drag in 2H08 (-$37B) than it was in 1H08 (-$42B)
• Involuntary inventory buildup contributed to economic output in 2H08 (after being a drag in
1H08) but as this unwinds in 1H09 it will further depress GDP
Early Warning Systems
For Mature and Emerging Markets
•
Early Warning Systems (EWS) provide “market alerts” and “headlights” capabilities
that anticipate likely changes in market growth dynamics and enable responses
“ahead of the curve”
•
EWS provide surveillance and monitoring of key high-frequency economic and
market-related leading indicators expected to most accurately reflect the market
landscape in the short-term
•
EWS focus on identifying and tracking the key high-frequency economic and marketrelated series determined to be the most robust indicators of future growth in both
mature and emerging markets
–
One advantage of leveraging the high-frequency economic and market-related leading indicators is that they
are generally publicly available and published well before data sources which cover the technology markets
•
Once a subset of key indicators is identified, predictive modeling techniques can be
employed to quantify the relationships between the high-frequency leading indicators
and historical market growth to assess the likely impacts of changes in the indicators
on market growth over the next several quarters
•
Monthly EWS “market alerts” reports provide country-specific “dashboards” that focus
on the most important high-frequency leading indicators so that the growth dynamics
of the relevant markets can be visually monitored and evaluated
•
EWS also generally enable “headlights” capabilities that identify the likely implications
of recent movements in the leading indicators on existing market growth forecasts
EWS Market Alerts
Country Dashboard: US Computers & Peripheral Equipment Investment
EWS Market Alerts
Country Dashboard: US Computers & Peripheral Equipment Investment
US Headlights: Predictive Model Forecasts
Computers & Peripheral Equipment
US Computers & Peripheral Equipment Forecasts
1997q1 - 2010q1
1995Q1
1995Q3
1996Q1
1996Q3
1997Q1
1997Q3
1998Q1
1998Q3
1999Q1
1999Q3
2000Q1
2000Q3
2001Q1
2001Q3
2002Q1
2002Q3
2003Q1
2003Q3
2004Q1
2004Q3
2005Q1
2005Q3
2006Q1
2006Q3
2007Q1
2007Q3
2008Q1
2008Q3
2009Q1
2009Q3
2010Q1
(Y/Y % Growth)
35
30
25
20
15
10
5
0
-5
-10
-15
-20
-25
-30
-35
BEA Computers & Peripheral Equipment
Pessimistic Forecast
Optimistic Forecast
EWS Market Alerts
Country Dashboard: Brazil Office Machinery & Data Processing Equipment
Although GDP is
an important
indicator of
growth, for Brazil
Office Machinery
& Data
Processing
Equipment the
relationship is
only moderate
EWS Market Alerts
Country Dashboard: Brazil Office Machinery & Data Processing Equipment
This indicator signaled a significant slowdown
in Brazil Office Machinery & Data Processing
Equipment growth was on the horizon in the
third quarter of 2008
EWS Market Alerts
Country Dashboard: Brazil Office Machinery & Data Processing Equipment
For the BRIC countries, US and
other G-7 series are often better
indicators of technology market
growth than country-specific ones
EWS Market Alerts
Country Dashboard: Brazil Office Machinery & Data Processing Equipment
Indicators that have shown a strong
negative relationship to technology growth
are also valuable to monitor
EWS Market Alerts
Country Dashboard: Brazil Office Machinery & Data Processing Equipment
For the BRIC countries, US and other
G-7 series are often better indicators of
technology market growth than countryspecific ones
Brazil Headlights: Predictive Model Forecasts
Office Machinery & Data Processing Equipment
Brazil Office Machinery & Data Processing Equipment
2003Q1-2010Q1
(Y/Y Growth)
70%
50%
30%
10%
-10%
-30%
-50%
BR_IND_PRO_OFFICE_Y
Pessimistic View
Optimistic View
2010Q1
2009Q3
2009Q1
2008Q3
2008Q1
2007Q3
2007Q1
2006Q3
2006Q1
2005Q3
2005Q1
2004Q3
2004Q1
2003Q3
2003Q1
-70%
EWS Market Alerts
Country Dashboard: China High-Technology Product Exports
As far back as early in the
second quarter of 2008 ,
this indicator foreshadowed
that a significant slowdown
in China High-Technology
Product Exports was on the
horizon
EWS Market Alerts
Country Dashboard: China High-Technology Product Exports
This indicator foreshadowed
that a significant slowdown in
China High-Technology
Product Exports was on the
horizon in the second quarter
of 2008
EWS Market Alerts
Country Dashboard: China High-Technology Product Exports
For the BRIC countries, US and
other G-7 series are often better
indicators of technology market
growth than country-specific ones
(Y/Y Growth)
2006M01
2006M02
2006M03
2006M04
2006M05
2006M06
2006M07
2006M08
2006M09
2006M10
2006M11
2006M12
2007M01
2007M02
2007M03
2007M04
2007M05
2007M06
2007M07
2007M08
2007M09
2007M10
2007M11
2007M12
2008M01
2008M02
2008M03
2008M04
2008M05
2008M06
2008M07
2008M08
2008M09
2008M10
2008M11
2008M12
2009M01
2009M02
2009M03
2009M04
2009M05
2009M06
2009M07
2009M08
2009M09
2009M10
2009M11
2009M12
2010M01
2010M02
2010M03
China Headlights: Predictive Model Forecasts
High-Technology Product Exports
China High-Technology Product Exports Forecasts
60.0%
2005M9 - 2010M3
40.0%
20.0%
0.0%
-20.0%
-40.0%
-60.0%
CH_HIGHTECH_EXP_SA
PESSIMISTIC VIEW
OPTIMISTIC VIEW
EWS Market Alerts
Country Dashboard: India Total Desktop PC Shipments
EWS Market Alerts
Country Dashboard: India Total Desktop PC Shipments
For the BRIC countries, US and
other G-7 series are often better
indicators of technology market
growth than country-specific ones
India Headlights: Predictive Model Forecast
Total Desktop PC Shipments
(Y/Y % Growth )
45
40
35
30
25
20
15
10
5
0
-5
-10
-15
India Total Desktop PC Shipments
Headlights Forecast
MAIT_DT PC
Predictive Model
EWS Market Alerts
Country Dashboard: Russia Total Information & Communications Technology Spending
EWS Market Alerts
Country Dashboard: Russia Total Information & Communications Technology Spending
For Russia, EMU and Euro Area
series are often better indicators of
technology market growth than
country-specific ones
Russia Headlights: Predictive Model Forecasts
Total Information & Communications Technology Spending
Russia - Total ICT Spending
2002-2010
(Y/Y % Growth)
35
30
25
20
15
10
5
0
-5
-10
2002
2003
2004
2005
WITSA TOTAL ICT
2006
2007
MODEL 1
2008
2009
MODEL 2
2010
Appendices
• Supplemental Market Characteristics
• Supplemental EWS Dashboards
Employment Mix by Industry (2008)
499M
777M
37M
7%
9%
7%
8%
4%
9%
4%
10%
4%
9%
3%
3%
8%
24M
90M
44M
15M
12%
11%
10%
14%
7%
5%
15%
3%
15%
22%
28%
5%
22%
5%
19%
59%
5%
7M
17%
16%
18%
18%
16%
18%
21%
7%
20%
13%
China
Thailand
Turkey
Brazil
Source: IPR Worldwide Economics/Demographics Database
Mexico
17%
Fin / Real Est /
Ins / Bus Svcs
24%
Wholesale /
Retail Trade
22%
Poland
18%
Russia
17%
Argentina
5%
Transportation /
Comm / Utilities
10%
Manufacturing
9%
Ag / Mining /
Construction
5%
6%
India
Personal /
Social Svcs
5%
7%
17%
22%
18%
12%
47%
25%
Gov / Ed
9%
55%
31%
Employment
17%
8%
19%
14%
154M
32%
10%
10%
7%
17%
15M
9%
6%
21%
4%
12%
10%
70M
16%
Saudi
Arabia
U.S.
Business Employment by Enterprise Size (2008)
21%
5%
24%
41%
34%
34%
24%
42%
42%
44%
6%
8%
9%
10%
10%
7%
12%
7%
12%
14%
11%
11%
13%
42%
60%
% White Collar
43%
1000+
19%
100-999
39%
1-99
24%
15%
14%
15%
23%
21%
88%
87%
81%
80%
78%
75%
75%
73%
63%
54%
India
China
Brazil
Turkey
Mexico
Source: IPR Worldwide Economics/Demographics Database
Thailand
Saudi
Arabia
Argentina
Poland
Russia
U.S.
FX Trends: U.S. Dollars per Currency Unit
Change from August 2008 to February 2009 – Monthly Averages
China
0%
Saudi
Arabia
Thailand
Argentina
India
-13%
-13%
Turkey
Brazil
Mexico
-30%
-30%
Russia
Poland
-4%
-10%
-20%
-30%
-29%
-32%
-40%
Source: oanda.com
-40%
EWS Market Alerts
Country Dashboard: China High-Technology Product Exports
EWS Market Alerts
Country Dashboard: India Total Desktop PC Shipments
EWS Market Alerts
Country Dashboard: Russia Total Information & Communications Technology Spending
EWS Market Alerts
Country Dashboard: Russia Total Information & Communications Technology Spending
For Russia, EMU and Euro Area
series are often better indicators of
technology market growth than
country-specific ones