Dollop of snow could plunge UK back into recession
NICK Parsons is in demand for his views on the global and UK economy. Yes, lots of gloom for the UK economy but worldwide, the picture is far more cheery, says the head of market strategy at National Australia Bank.
During the interview, he breaks off to take a call from a TV station 5,500 miles away in India.
"The world economy is not heading into recession – it is growing and will grow by 3% this year and 3% next year and by 3% for the foreseeable future.
"The world will expand by $20 trillion over the next five years," says the economist, who was in Nottingham to talk to customers of NAB subsidiary Yorkshire Bank.
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"It will mean lots of opportunity for trade, business and industries across all geographies.
" The world economy is not about to plunge into a recession."
Mr Parsons says this is explained by a big shift in global dynamics . For the first time, the emerging markets will take a bigger share of the world economy than developed markets.
"This is a massive structural change.
"Go back 30 years and the balance was 70:30. This year, it is 50:50 and from next year, the emerging markets (countries such as China, India, Brazil) will have emerged. They will be bigger – and that is a big structural shift.
"The balance of power in the world economy has changed."
This is emphasised by figures showing the world economy in 2000 was $30 trillion ($30,000 billion). Today, it is $70,000 billion and in five years' time, it will be $90 trillion. All this is on the back of China, India and South East Asia.
"A third of the world's population lives in two countries, India and China.
"Two-thirds of the world's population lives in 16 countries. More people live in Indonesia – 275 million – than in the entire European Union. It has moved from being the 27th-largest economy ten years ago to 16th. Russia has moved from 21st to ninth.
"The key point is, these countries are all growing rapidly. Even the people at the bottom end of the income chain are growing their incomes.
"These are countries with big populations that are growing rapidly with big income growth from a low base. They spend their money on food, shelter, transport and energy.
"All those sectors are booming globally.
"The bad news is that it is inflationary for us, competing with these five billion people, When you go shopping, you are up against them and their incomes are going up.
"The good news is that transport and energy are two of the areas the UK does well – motor manufacturers, aeroplanes, power generation, small-scale power equipment.
"We are major exporters in those fields and a lot of it is based in the East Midlands.. There is a lot of expertise in this region. It is both a challenge and an opportunity, certainly no reason to be overly downbeat.
"When I come to this region, I meet a lot of innovative businesses.
"The region didn't have a housing boom and bust. It didn't see the hollowing out of its manufacturing base as happened elsewhere because it always had particular specialities that are in global demand."