Transcript trade and development report, 2013

TRADE AND
DEVELOPMENT
REPORT, 2013
http://unctad.org/en/PublicationsLibrary/tdr2013_en.pdf
Adjusting to the
changing dynamics of
the world economy
New York
14 October 2013
[email protected]
Key points:
 The global economy is in a structural crisis: reverting to
pre-crisis growth strategies is neither possible nor desirable
 Export-led development strategies are no longer viable.
More balanced development strategies with a greater role for
domestic and regional demand needed – this requires
reconsideration of income distribution
 5 years after the collapse of Lehman Brothers, taming finance
remains a priority: financial systems need to serve the ‘real’
economy and facilitate adaptation to new global demand
patterns
The global economy remains far away from a
strong, sustained and balanced growth path
World output growth, selected country groups, annual percentage change, 2007–2013
Economic slowdown also affects developing
countries
Output growth, selected developing regions, annual percentage change, 2007–2013
Developing country exports and developed country
imports remain far from their pre-crisis dynamisms
Volume of export and imports, selected country groups, 2004–2013 (index numbers, 2005–100)
Volume of exports
Volume of imports
180
180
160
160
140
140
120
120
100
100
80
80
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Developed countries
Emerging market economies
Emerging market economies: trend 2004–2008
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Developed countries
Emerging market economies
Developed countries: trend 2004–2008
Employment deficit in developed countries
Compression of labour income share led to
overindebtedness and is at the root of the crisis
Global imbalances reflect adjustment
asymmetries
Current account imbalances of selected groups of countries, percent of WGP
Public and private debt in selected Euro Area countries
(in % of GDP)
Short-term fiscal multipliers
(Government spending on goods and services)
Monetary policies in developed countries did not lead to
more domestic credit, but contributed to international
financial instability
MONETARY BASE AND BANK CLAIMS ON THE PRIVAT SECTOR, 2001–2012
(Per cent of GDP)
A. United States
B. Euro area
70
25
160
50
140
60
20
40
120
50
15
40
100
30
80
30
10
20
20
60
40
5
10
10
20
0
0
2001
2003
2005
2007
2009
2011 2012
Bank claims on private sector
0
0
2001
2003
2005
2007
Monetary base (right scale)
2009
2011 2012
Structural nature of the present crisis is reflected in
changing dynamics of the world economy
• Developed countries recovery is hindered by low demand and
are not tackling the causes of the crisis
• No growth decoupling of developing countries and continued
high vulnerability; yet, even if developed countries were to
persevere with their current policy stance, developing
countries could still improve their economic performance by
providing coordinated economic stimuli
• The share of developing countries in global GDP has strongly
increased and the economic size of the largest developing
countries makes larger role of domestic demand viable
• South-South trade has strongly increased; yet, it has not
become an autonomous engine of growth
The structure of world economy is changing
Shares in global GDP, 1990-2012
At market prices
At purchasing power parity
The direction of global trade has shifted towards a
greater importance of South-South trade
Shares in world exports, selected country groups, 1995–2012 (per cent)
60
50
40
30
20
10
0
1995
North-North exports
2000
2008
North-South exports
2010
South-North exports
2012
South-South exports
Consumption of selected commodities by region, 2002 and 2012
600
400
500
300
400
300
200
200
100
100
0
2002
2004
2006
2008
2010
All commodities
All commodities (in euros)
Minerals, ores and met als
Crude petroleum
2012
2013
0
2002
2004
2006
2008
2010
2012
2013
Food
Tropical beverages
Vegetable oilseeds and oils
Agricultural raw materials
• The rapid rise of commodity prices starting in 2002 has boosted
economic growth in commodity producing countries
• The expansionary phase of the commodity price supercycle may have
come to an end, but a price collapse is unlikely to occur in the next few
years
• The main challenge for commodity producing countries remains
appropriating a fair share of the resource rents and using the revenues
to reduce income inequality and spur industrial production
Per capita income and different income classes,
selected countries, 2005
5.5
United States
5.0
Russian Federation
4.5
Brazil
China
Indonesia
India
Nigeria
4.0
3.5
3.0
2.5
1
2
3
4
5
6
7
Income distribution deciles within countries
8
9
10
GDP growth in alternative policy scenarios (per cent)
World
Dev eloped econo mies
8
8
10
6
6
Dev eloping and emerging econo mies
8
4
4
6
2
2
4
0
0
-2
1995 2000 2005 2010 2015 2020 2025 2030
Baseline
Baseline:
Scenario A:
Scenario B:
-2
2
-4
1995 2000 2005 2010 2015 2020 2025 2030
0
1995 2000 2005 2010 2015 2020 2025 2030
Scena rio A
Scena rio B
Projection of current trends without policy changes nor shocks
All countries follow more expansionary demand-driven policies
Developed economies maintain current policy stances and only
developing and transition economies follow more expansionary
policies, although stimulus is smaller than in Scenario A
Labour-income share in alternative policy scenarios
(per cent)
World
Developing and emerging
economies
Dev eloped economies
60
65
60
55
55
50
60
45
50
40
55
1995 2000 2005 2010 2015 2020 2025 2030
Baseline
Baseline:
Scenario A:
Scenario B:
1995 2000 2005 2010 2015 2020 2025 2030
Scenario A
1995 2000 2005 2010 2015 2020 2025 2030
Scenario B
Projection of current trends without policy changes nor shocks
All countries follow more expansionary demand-driven policies
Developed economies maintain current policy stances and only
developing and transition economies follow more expansionary
policies, although stimulus is smaller than in Scenario A
Financing the real economy for meeting the new
patterns of demand
_____________________________________________________________________________
A redesign of development strategies involves an expansion of
productive capacities and their adaptation to new demand patters,
all of which requires investment and its financing
Key challenges:
 Capital flows management: pragmatic exchange-rate
management and capital-account management needed to reduce
vulnerability to external financial shocks
 Domestic financial systems need to channel credit towards
productive investment in the real sector: central banks should
pursue a credit policy, rather than just a monetary policy
Monetary policies in developed countries did not lead to
more domestic credit, but contributed to international
financial instability
MONETARY BASE AND BANK CLAIMS ON THE PRIVAT SECTOR, 2001–2012
(Per cent of GDP)
A. United States
B. Euro area
70
25
160
50
140
60
20
40
120
50
15
40
100
30
80
30
10
20
20
60
40
5
10
10
20
0
0
2001
2003
2005
2007
2009
2011 2012
Bank claims on private sector
0
0
2001
2003
2005
2007
Monetary base (right scale)
2009
2011 2012
International capital flows are highly volatile
Net private capital inflows to
emerging economies, per cent of GDP
Net capital inflows, billions of dollars
14 000
9
8
12 000
7
10 000
6
8 000
5
6 000
4
3
4 000
2
2 000
0
1976
1
0
1981
1986
1991
1996
2001
Developed economies
Developing economies
Transition economies
2006
2011
1978
1984
1990
1996
2002
2008 2012
Net private inflows
Net private inflows, excl. equity outflows
Developing countries should rely mainly on domestic sources
of finance, especially retained profits and bank credit
Sources of investment finance, selected country groups, 2005-2012, in %
___________________________________________________________________
Financing the real economy
Policy conclusions
• Monetary policy alone is not sufficient to stimulate investment
• Central banks should play an active role in the implementation
of a growth and development strategy through a credit (and not
only monetary) policy
• Reform at the national and global levels is needed not only to
improve financial and economic stability but to ensure that
sufficient investment finance goes into productive activities
and helps developing countries address the new development
challenges