Impacts of the Global Economy on Asia Pacific Travel. 29 June 2007 John Walker

Transcription

1 Impacts of the Global Economy on Asia Pacific Travel 29 June 2007 John Walker

2 Oxford Economics Founded in 1981 Over 300 clients including blue chip companies and government agencies throughout the US, Europe, Asia and the Middle East. 50 staff, including more than 30 professional economists with at least Masters qualifications in economics from top-flight universities around the world. Offices in Philadelphia, Oxford, London & Switzerland.

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10 World economy strongest for 30 years 6 5 World: GDP growth % year measured on a PPP basis Forecast Source: Oxford Economics

11 especially given the rise in oil price Oil price $/barrel Real (1995 US prices) F'cast Nominal Source: Oxford Economics

12 World GDP Growth % Change on Previous Year World GDP Growth % Change on previous year US Japan Eurozone UK South Korea China Other Asia Mexico Other Latin America Eastern Europe World World (PPP)

13 Aspects of Globalisation Surging trade in goods and services M&A activity grows across countries and sectors At the expense of physical Investment?? Portfolio flows take on additional importance More stable than they think but.

14 China and India continue to boom Emerging Markets: GDP Growth % year China Forecast India All emergers average Source: Oxford Economics

15 China: Trade balance $bn month moving total Total Hong Kong US EU 0-40 Japan -80 Rest of World ex oil Source: Oxford Economics

16 Europe: Industrial production % year 12 3 month moving average 9 Germany 6 France Italy Source: Haver Analytics

17 Globalisation driving world trade

18 holding down inflation... World: CPI inflation % year 8 7 US 6 Eurozone 5 Forecast Japan Source: Oxford Economics

19 helped by low wage growth

20 India Sectoral Employment Manufacturing Services Agriculture 223 million Source: WDI

21 Aspects of Globalisation Surging trade in goods and services M&A activity grows across countries and sectors At the expense of physical Investment?? Portfolio flows take on additional importance More stable than they think but.

22 World: Long term interest rates % US 4 3 Eurozone 2 1 Japan Source: Haver Analytics

23 World: Stockmarkets Jan 1996= DAX 200 S&P FTSE MSCI Emerging Markets index Source: Haver Analytics

24 ..fuelling new surge in M&A activity M&A activity by region US$ trillions 4.2 M&A activity by region '000 deals Global 30 Global US 1.2 Europe 0.6 Asia (inc Japan) Source: Dealogic 15 Europe 10 5 Other US Source: Dealogic

25 M&A boom broadly based Global M&A by industrial sector US$ bn Telecommunications 800 Finance 700 Computers & Electronics 600 Utility & Energy 500 Real Estate/Property Source: Dealogic

26 Helping countries like the US and UK International: Services output 1990= UK US Japan Western Europe (excl UK) Source: Oxford Economics

27 Aspects of Globalisation Surging trade in goods and services M&A activity grows across countries and sectors At the expense of physical Investment?? Portfolio flows take on additional importance More stable than they think but.

28 World: Business investment % year 20 Eurozone US Japan Source: Oxford Economics

29 US: Housing activity Millions Housing starts New home sales Source: Haver Analytics

30 Why is investment not stronger? M&A makes companies more cautious. More services and less manufacturing. Capital goods prices falling sharply and productivity rising sharply Switch of production to Emerging markets

31 Aspects of Globalisation Surging trade in goods and services M&A activity grows across countries and sectors At the expense of physical Investment?? Portfolio flows take on additional importance More stable than they think but.

32 Global current account balances 2006 US Australia Canada UK Old Europe Japan New Asia OPEC ROW Anglosphere Non-Anglosphere World discrepancy Eurozone, Norway, Switzerland, Denmark US, Australia, Canada, UK Source: Oxford Economics ($bn)

33 US financial account in 2006 (US$bn) US Financial Account in 2005 (US$bn) Estimate* US assets abroad ,055 US private assets ,060 Direct Investment Foreign securities US claims reported by non bank US claims reported by US banks Foreign assets in US 1,450 1,212 1,723 Official assets Direct investment US treasury securities US securities other than treasury US liabilities reported by US banks * Estimated from 2006 Q3 figures Source: US Bureau of Economic Analysis

34 Assets in the US owned by Rest of World Foreign assets held in the US % Foreign private wealth in US as share of US market Foreign private wealth in US as share of own wealth Source : Oxford Economics

35 Aspects of Globalisation Surging trade in goods and services M&A activity grows across countries and sectors At the expense of physical Investment?? Portfolio flows take on additional importance More stable than they think but.

36 But greater volatility at the sector level US: Motor vehicles and engineering output % year Engineering Motor vehicles Source: Oxford Economics

37 Some of the Risks An end to low long-term interest rates Widening risk spreads A problem in private equity Global decline in housing Trade war

38 Asia-Pacific tourism spending flows Travel & Tourism Spending US$ bn Outbound spending Inbound spending China India Japan Korea Chinese Taipei Source : Tourism Economics Hong Kong Australia

39 Asia-Pacific tourism spending flows Travel & Tourism Spending US$ bn Outbound spending Inbound spending China India Japan Korea Chinese Taipei Source : Tourism Economics Hong Kong Australia

40 Outbound spending growth exceeds incomes Outbound Spending & Incomes average annual growth 30% 25% 20% Outbound spending Disposable income per capita 15% 10% 5% 0% -5% China India Japan Korea Chinese Taipei Source : Tourism Economics Hong Kong Australia

41 Outbound spending growth exceeds incomes Outbound Spending & Incomes average annual growth 25% 20% Outbound spending Disposable income per capita 15% 10% 5% 0% China India Japan Korea Chinese Taipei Source : Tourism Economics Hong Kong Australia

42 Asia-Pacific total Region: Outbound Spending & Income % year 30% Forecast 25% 20% Outbound Spending 15% 10% 5% 0% Disposable Income (per capita) -5% -10% -15% Source : Tourism Economics

43 China China: Outbound Spending & Income % year 80% Forecast 70% 60% 50% 40% 30% Outbound Spending 20% 10% 0% Disposable Income (per capita) -10% Source : Tourism Economics

44 India India: Outbound Spending & Income % year 70% Forecast 60% 50% Outbound Spending 40% 30% 20% 10% 0% Disposable Income (per capita) -10% Source : Tourism Economics

45 Japan Japan: Outbound Spending & Income % year 40% Forecast 30% Outbound Spending 20% 10% 0% -10% -20% Disposable Income (per capita) -30% Source : Tourism Economics

46 Change in regional out-spending shares Other 35% 2006 Japan 22% Other 31% 2016 Japan 14% Australia 6% Australia 9% Korea 12% India 5% China 17% Korea 9% India 10% China 30%

47 Thank You! John Walker President and Chief Economist Oxford Economics June 2007

48 The Economist Commodity Price Index - (US$ terms,2000=100) Aggregates All Items Food Industrial Metals 75 Monthly average 50 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Source : Oxford Economics/Haver Analytics Oil