TEN YEARS AFTER THE GREAT FINANCIAL CRISIS: WHAT HAS AND HAS NOT CHANGED IN THE GLOBAL ECONOMY ? GLOBAL INTERDEPENDENCE CENTER “CENTRAL BANKING SERIES”
OLIVIER GARNIER DIRECTOR GENERAL – ECONOMICS AND INTERNATIONAL RELATIONS
14 MAY 2018
1. Growth / Productivity 2. Labour markets, inflation and monetary policies 3. Debt / Global imbalances
CMR - Partie MacroĂŠconomique - 23/01/2018
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1. GLOBAL TRADE & INDUSTRIAL PRODUCTION
World trade and industrial production (volumes) yoy %; source: CPB 20,0 15,0 10,0 5,0 0,0 -5,0 -10,0 -15,0 -20,0
World industrial production
World trade
2
1. REAL GDP GROWTH : ADVANCED VS. EMERGING ECONOMIES
Real GDP Growth (in % y-o-y GDP) 10
Emerging 8 6
4,9 %
4 2
2,5 %
0
Advanced
-2 -4 2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
Source: IMF, WEO April 2018 3
1. REAL GDP PER CAPITA : US VS. EA
Real GDP per Capita 100 = 2000 Q1 125 120 115 110 105 100 95 Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 2016 Q1 2018 EA
US
EA/US
Source: Datastream 4
1. WITHIN THE EURO AREA: REAL GDP RELATIVE TO AVERAGE Real GDP relative to EA average 100 = 2000 Q1 120 115 110 105
100 95 90 85 80 Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 2016 Q1 2018 France/EA
Germany/EA
Italy/EA
Spain/EA
Source: Datasteram 5
1. PRODUCTIVITY TRENDS Average annual growth rate of labor productivity per hour Smoothed indicator (HP filter, λ = 500) - Whole economy – 1891-2016 – In % 9% 7% 5% 3% 1% -1%
United States
Euro Area
Japan
Source: Bergeaud, Cette and Lecat (2016) - See: www.longtermproductivity.com
6
1. WORKING-AGE POPULATION GROWTH
Working-age population (15+, 2000=100) 125 120 115 110 105 100 95 90
France
Germany
China
United States
Source: ILO Note: break in series correspond to methodological changes
7
1. SHARES IN GLOBAL GDP
8
1. Growth / Productivity 2. Labour markets, inflation and monetary policies 3. Debt / Global imbalances
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Q1-2000 Q4-2000 Q3-2001 Q2-2002 Q1-2003 Q4-2003 Q3-2004 Q2-2005 Q1-2006 Q4-2006 Q3-2007 Q2-2008 Q1-2009 Q4-2009 Q3-2010 Q2-2011 Q1-2012 Q4-2012 Q3-2013 Q2-2014 Q1-2015 Q4-2015 Q3-2016 Q2-2017 Q1-2018
2. UNEMPLOYMENT RATES
Unemployment rates, in %
14,0
12,0
10,0
8,0
6,0 US
EA
4,0
2,0
0,0
Source: OECD
10
Employment rate (Men 25-54)
90,0 94,0
88,0 93,0
86,0
84,0
82,0
80,0
78,0
76,0 Q1-2000 Q1-2001 Q1-2002 Q1-2003 Q1-2004 Q1-2005 Q1-2006 Q1-2007 Q1-2008 Q1-2009 Q1-2010 Q1-2011 Q1-2012 Q1-2013 Q1-2014 Q1-2015 Q1-2016 Q1-2017 Q1-2018
Q1-2000 Q1-2001 Q1-2002 Q1-2003 Q1-2004 Q1-2005 Q1-2006 Q1-2007 Q1-2008 Q1-2009 Q1-2010 Q1-2011 Q1-2012 Q1-2013 Q1-2014 Q1-2015 Q1-2016 Q1-2017 Q1-2018
2. PARTICIPATION RATES & EMPLOYMENT RATES. FOCUS MEN (25-54)
Participation rate (Men 25-54)
92,0
91,0
90,0
US 89,0 US
EA 88,0 EA
87,0
86,0
85,0
Source: OECD
11
10,0 10,0
0,0 0,0
Employment rate (55-64)
70,0 70,0
60,0 60,0
50,0 50,0
40,0 40,0
30,0 US
20,0 EA
Q1-2000 Q1-2001 Q1-2002 Q1-2003 Q1-2004 Q1-2005 Q1-2006 Q1-2007 Q1-2008 Q1-2009 Q1-2010 Q1-2011 Q1-2012 Q1-2013 Q1-2014 Q1-2015 Q1-2016 Q1-2017 Q1-2018
Q1-2000 Q1-2001 Q1-2002 Q1-2003 Q1-2004 Q1-2005 Q1-2006 Q1-2007 Q1-2008 Q1-2009 Q1-2010 Q1-2011 Q1-2012 Q1-2013 Q1-2014 Q1-2015 Q1-2016 Q1-2017 Q1-2018
2. PARTICIPATION RATES & EMPLOYMENT RATES. FOCUS SENIORS (55-64)
Participation rate (55-64)
30,0 US
20,0 EA
Source: OECD
12
2. INFLATION
CPI yoy % 6 5 4 3 2 1 0 -1 -2 -3
US
EA
Source: OECD
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2. OIL PRICES
Oil prices (Brent, USD) 160 140 120 100 80 60 40 20 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: Thomson Reuters 14
2. MAIN CENTRAL BANKS POLICY RATES
Central Bank Policy Rate (%) 7 6 5 4 3 2
1 0 -1 2000
2002
2004
2006 US
2008
2010 EA
2012
2014
2016
2018
Japan
Sources: Reuters, ECB, BOJ 15
2. CENTRAL BANKS’ BALANCE SHEETS AND ASSET PURCHASES Cettral bank balance sheet (2000 Q1=100) 900,00 800,00 700,00
600,00 500,00 400,00 300,00 200,00 100,00
Q1 2000 Q4 2000 Q3 2001 Q2 2002 Q1 2003 Q4 2003 Q3 2004 Q2 2005 Q1 2006 Q4 2006 Q3 2007 Q2 2008 Q1 2009 Q4 2009 Q3 2010 Q2 2011 Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015 Q4 2015 Q3 2016 Q2 2017
0,00
ECB
FED
BoJ
Source: Datastream
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2. 10YR TREASURY YIELDS
10-year sovereign yields In %; source: Thomson Reuters 7,0 6,0 5,0 4,0 3,0 2,0 1,0
0,0 -1,0
Japan
Germany
USA
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2. COST OF CAPITAL
NFCs' Cost of Capital : France 15
10
5
0
2006M1
2008M1
CoE with buybacks
2010M1
2012M1
WACC
2014M1
Loan rate
2016M1
2018M1
Bond rate
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2. 2-YEAR GOVERNMENT BOND YIELD SPREAD (GER-US) & EUR/USD EXCHANGE RATE 2-year sovereign yields spread Ger-USA (left) and $/€ exchange rate (right) In percentage points; source: Thomson Reuters 3,0
1,800
2,0
1,600
1,0 1,400 0,0 1,200 -1,0 1,000 -2,0 0,800
-3,0 -4,0
0,600
Spread
Exchange rate
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2. REAL EFFECTIVE EXCHANGE RATES
Real effective exchange rate – CPI-based (BROAD indices - 61 economies) 100 = average 1994-2018
140 130 120 110 100 90 80 70 60 01/2000
01/2003
USA
01/2006
euro area
01/2009
Japan
01/2012
01/2015
UK
01/2018
China
Source : BIS
20
1. Growth / Productivity 2. Labour markets, inflation and monetary policies 3. Debt / Global imbalances
CMR - Partie MacroĂŠconomique - 23/01/2018
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3. NONFINANCIAL DEBT : PRIVATE & PUBLIC
Public debt (% of GDP)
Non financial private sector debt (% of GDP)
90 80 70 60 50
EA
US
Source: Banque de France
22
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
40 2002
US
100
2001
EA
110
2000
180 170 160 150 140 130 120 110 100 90 80 2000 2002 2004 2006 2008 2010 2012 2014 2016
3. GLOBAL NONFINANCIAL DEBT: ADVANCED & EMERGING
% world GDP
250
200
165
150
100
176
177
50
Advanced economies Emerging markets
71 23
30
2002
2007
2017*
200
206
237
0 Non-financial sector debt (% world GDP) Source : BIS, BdF calculations
*Average over the first 3 months of 2017
23
3. CURRENT ACCOUNT BALANCES
Current account balances (% of GDP)
Current account balances (bn USD) 1500
20,0 15,0
1000
10,0 500 5,0 0
Oil exporters
China
US
EA
Oil exporters
China
US
EA
Source: WEO April 2018
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2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
-10,0 2002
-1000
2001
-5,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
-500
2000
0,0
3. CURRENT ACCOUNT BALANCES WITHIN THE EURO AREA
25
3. NONFINANCIAL CORPORATE NET LENDING (AS % OF GDP)
26
3. GLOBAL SAVING & INVESTMENT
Source: Chen-Karabarbounis-Neiman (2017) 27
3. GLOBAL CORPORATE SAVING
Source: Chen-Karabarbounis-Neiman (2017) 28
Conclusion
CMR - Partie MacroĂŠconomique - 23/01/2018
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HOW TO EXIT DURABLY THE INCOMPATIBILITY TRIANGLE?
Slower Trend in Productivity Growth
Ageing Population
Higher Private and Public Debt Ratios Ultra-accommodative monetary policies can only provide a window of opportunity for preparing a durable exit out of this triangle 30