Deloitte’s latest look at the global economy
By Ira Kalish - January 25, 2011
As editor of Deloitte Research’s quarterly Global Economic Outlook I often struggle to find new things to say about the economy other than updating the outlook. In this quarter, my colleagues and I have chosen to look a bit beyond the horizon. While many economists today focus on the short term transition out of crisis and into sustainable recovery, one cannot help but feel that a bigger and longer term transition is under way.
Of course, things have been changing for some time. For the past 30 years, the big emerging markets have gradually increased their share of the global pie following two centuries of relative decline. But now, the process of catching up appears to be accelerating, and with dramatic consequences. This is most noticeable in the aftermath of the global recession. As developed markets struggle to recover, big emerging countries are racing ahead—not only boosting their own living standards, but stimulating growth in the rest of the world. With much more rapid growth than the developed world, these countries have become significant players in the global economy. For the first time, their policies are of critical importance to everyone else. Moreover, as they grow, their middle classes are rising in importance and attracting the lion’s share of attention from many of the world’s biggest companies. For the developed economies, this means managing a process of relative decline.
Consequently, this quarter’s Outlook spends a good deal of time focused on the changing world of emerging nations. Interestingly, the challenges they face are quite different from those faced by the developed economies. In the U.S., Europe, and Japan, the biggest challenges are maintaining decent growth and reducing long-term fiscal deficits. In the emerging economies, the challenge is to keep the economies from overheating and generating serious inflation. Hence governments are struggling with balancing the threat of inflation with the need to maintain competitiveness in the global economy.
The emergence of the emerging nations is but one of the many new realities that global companies face. Indeed, “new realities” is the theme of this year’s World Economic Forum meeting in Davos, Switzerland. In the latest issue of Deloitte Resarch’s quarterly Global Economic Outlook, Elisabeth Denison examines some of the new realities of the global economy and their implications for global business. She looks at the changing dynamics of East versus West, private sector versus public sector, energy demand versus sustainability, and youth versus aging among other topics. The rest of the report focuses on specific geographies including the U.S., Europe, Japan, the BRIC nations, and a new outlook on sub-Saharan Africa.
Today, readers of newspapers and viewers of television news are probably perplexed by the arguments about exchange rates, inflation, deficits, and the like. If you want a bit more clarity on these issues, as well as a point of view from people who do nothing but follow these issues, I suggest reading our latest Global Economic Outlook report.
Dr. Ira Kalish is Director of Global Economics at Deloitte Research, Deloitte Services LP. He is an expert on global economic issues as well as the effects of economic, demographic and social trends on the global business environment. He has authored more than 150 articles and reports on economic and consumer trends around the world.