Top 10 Game Changers in 2014

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Top 10 Game Changers in 2014 by Mind Map: Top 10 Game Changers in 2014

1. The monetary musketeers and Japan’s d’Artagnan

1.1. yellen

1.1.1. Equity markets reacted positively to this announcement, suggesting the decision was well anticipated

1.1.2. recovery of the US economy if it remains on track, stronger uncertainties will weigh on emerging markets could suffer from renewed capital outflows.

1.2. Carney & Draghi

1.2.1. Funding for Lending Scheme refocusment improved substantially

1.2.2. ECB cut its key interest rate conventional measures in the first instance

1.3. Abenomics

1.3.1. Monetary policy Bank of Japan continue its quantitative easing

1.3.2. Expansionary fiscal policy government additional fiscal stimulus

1.3.3. structural reform government improve labor market flexibility

2. Disinflation in the advanced economies

2.1. supply and demand

2.1.1. weak demand and supply high unemployment rates, contracting (or decelerating) wages ...etc

2.2. Inflation

2.2.1. big drop in the inflation rate in the US weakened big drop also in the euro zone

2.3. commodities

2.3.1. Risk upside risks remain on the back of structural factors Supply side risks mainly from instability in the Middle East and North Africa

2.4. EMU

2.4.1. unemployment rates Rising unemployment rates at record levels in southern European economies Leading to sharp declines in real wages

2.4.2. Deflation Greece and Cyprus have experienced deflation

2.4.3. corporate profitability downside pressures on prices could endanger corporate profitability

3. Periphery countries

3.1. Emerging Europe

3.1.1. National currencies Should downward pressure on national currencies increase in H1 2014

3.1.2. most countries avoided that sell-off they had not attracted substantial capital inflows in the previous years

3.1.3. Turkey where large short-term capital inflows have financed high current account deficits in recent years Central Bank of Turkey stem depreciation pressures mainly through FX interventions

3.2. Heterogeneity

3.2.1. current account deficits Turkey, Serbia and Ukraine external shortfalls of GDP. high annual external debt payments falling foreign exchange reserves Ukraine, Turkey, Poland, Bulgaria, Hungary and Romania Argentina and Venezuela Peru and Uruguay risen the GDP

3.3. Export markets

3.3.1. global economic environment growth performance United States and the euro zone

3.3.2. commodity prices brighter outlook for the US will support most Latin American countries

3.3.3. Balkans send around 60% of its exports to the euro zone

3.3.4. Turkey exports going to the eurozone has fallen

3.3.5. Russia & Ukraine benefit less from the euro zone recovery

4. Old and new political risk in 2014

4.1. MENA Region

4.1.1. ongoing risks, including fragile political transitions North Africa (Egypt, Libya & Tunisia) & Yemen Syria Civil war Iraq high security alerts Bahrain unresolved sectarian issues Israel & the authorities in the Palestinian territories continuing stand-off Arab Spring Tensions between Shia & Sunni Muslem communities

4.2. Busy political calendar

4.2.1. significant elections BRICS (Brazil, Russia, India , China & South Africa) large emerging economies Indonesia, Turkey ,Ukraine & United States United Kingdom Referendum in Scotland India electoral track record

4.3. Institutions and societal risk

4.3.1. stable political base good bedrock for cultivating external investor & trading interests

4.3.2. lack of political enfranchisement social pressures were building in MENA

4.3.3. Modern communication systems

4.3.4. Political risk ongoing conflicts & tensions

5. A new form of protectionism

5.1. Regional Blocs

5.1.1. Asian Economic Community (AEC) creating a single market and production base competitive & world-integrated region

5.1.2. Pacific Alliance advance free trade with a “clear orientation towards Asia

5.1.3. GCC difficulties forming a regional bloc

5.1.4. customs union Bahrain signed a free trade agreement with the US & the UAE Oman rejected membership of a monetary union

5.2. Bridging Continents

5.2.1. transatlantic agreement reinvigorating bilateral trade between the US & the EU enable them to make up some global market share lost to emerging countries

5.2.2. pacific agreement negotiation between 12 countries, including the US, Chile, Japan and Malaysia 40% of global GDP 26% of global trade eliminate tariffs on goods & services, reduce non-tariff barriers & harmonize regulations.

5.3. Supply Chain Barriers

5.3.1. World Bank reducing supply chain increase global GDP

5.3.2. obstacles market access border administration telecommunications & transportation infrastructure business environment

5.3.3. Lowering Supply chain barriers gains would be more fairly distributed among countries

5.3.4. Enabling Trade Index World bank Best countries

6. Emerging markets

6.1. Emerging Economies

6.1.1. Risk cyclical risk short-term weaknesses liquidity risk economy’s capacity structural weaknesses

6.2. Types of Policies

6.2.1. economic downturn.

6.2.2. monetary policy financial stability defense

6.2.3. large emerging countries keep their currencies at safe levels, interest rates Indonesia & Brazil

6.2.4. Fiscal policy GDP growth ideal tool for policy makers during challenging periods

6.2.5. Financial Crisis of 2009 large economies increased public expenditure

6.2.6. pro-cyclical policies previous track records of debt default and perceptions of corruption

6.3. Exchange risk for corporate

6.3.1. Macro risk stronger financial fundamentals & responsive policies correspondingly lower

6.3.2. currency fluctuation highly sensitive External trades

7. China’s transformation

7.1. Stable Growth

7.1.1. more inclusive and sustainable growth, less reliant on exports

7.1.2. support “appropriate growth” and maintain “proactive fiscal” and prudent monetary “policies”

7.1.3. GDP growth will probably slow

7.1.4. consumption based, supported by rising incomes and employment

7.2. Credit & Financing

7.2.1. markets are expected to get “a decisive” role in resource allocation

7.2.2. financial sector will be opened to include acceleration in interest rate liberalization and the convertibility of the RMB capital account

7.2.3. Social financing grew & major part of the non-standard financing, increased

7.3. Regional Trade

7.3.1. Main trade partners south Asian countries

7.3.2. Imports from China will continue to fuel growth in the region in 2014

8. Re-industrialization of United States

8.1. Limited impact of the Fed tapering

8.1.1. Fed announced tapering of its QE program, with expectations that it will terminate by the end of 2014 QE tapers, long term rates will likely rise, making lending more profitable which will expand credit more rapidly

8.1.2. Fed will keep short term rates at 0% through 2015 or later monetary policy remains very loose and is expected to contribute to growth in most sectors

8.2. Managing short-term political turmoil

8.2.1. Fiscal policy uncertainty has been reduced

8.2.2. Congress approved the first budget in four years

8.3. Energy Policies

8.3.1. Energy revolution new reserves of shale gas and crude oil continue to flood the US market with cheap energy.

8.3.2. WTI crude sells at a 13% discount to the global Brent price

8.3.3. Natural Gas recently been bid up due to cold weather to $4/mmbtu

8.3.4. Cheap energy boosting manufacturing natural gas powered autos

9. Euro Zone Economic Situation

9.1. Structural Reforms

9.1.1. Greece, Portugal & Spain they did a 10% reduction on current account defict

9.1.2. Italy Implemented its first measures only in mid 2012.

9.1.3. European Leaders Germany high tech exports, started to implement a strategy towards smart industry France labour market rigidity and the tax burden remain very high

9.2. Financing

9.2.1. Economic Crisis has been the credit crunch in southern European countries

9.2.2. credit financing contracting in Germany & France weak demand and a reluctance of firms to invest

9.2.3. corporate funding 2/3 of it in the eurozone comes from banks common strategy restore credit channels

9.2.4. R&D increase in R&D spending common energy policy lower EUR

10. Global Re-balancing

10.1. Growing in Sync

10.1.1. advanced economies growth paths between regions have become more synchronized

10.1.2. financial crisis supported global GDP growth by emerging economies supported global GDP growth

10.1.3. AE & EM together on rise contributing to growth

10.1.4. 55% of world GDP growth to come from the emerging markets in 2014-15

10.1.5. GCC countries and Asian dragons were able to match the living standards of advanced economies

10.1.6. Slovenia and Slovakia caught up, particularly some in Emerging Europe

10.2. Current Account

10.2.1. improvement of financial fundamentals avoid new financial pressures

10.2.2. Fiscal consolidation euro zone a start for the countries most at risk in that region

10.3. Political Economy

10.3.1. export boosting innovation to reinforce growth potential avoiding

10.3.2. business environment long way to go as many of the large emerging economies difficult markets for investors

10.3.3. political stability key factors in reassuring investors & promoting corporate activity

10.3.4. structural adjustment take time before benefits materialize, typically from 5 to 10 years