The post-crises world or, the new normal

Collision Repair Association Conference – 190413slide 1

The post-crises worldor, the new normal

presentation to

Collision Repair Association 2013 Conference

Dr Ganesh NanaChief Economist

Business and Economic Research Ltd

19 April 2013


The new normal• which two economies had a 60% share

of the world economy 2000 years ago?• which two economies still had a half

share in the world economy in 1820?

old


The debt crisis in a nutshell

the gaps between earning and

spending

NB: its about nations, not governments

-500 -400 -300 -200 -100 0 100 200 300

United States

Spain

Italy

Australia

India

Brazil

France

Indonesia

Hong Kong

Thailand

Malaysia

Korea

Singapore

Taiwan

Netherlands

Norway

Switzerland

Japan

Germany

China US$bn


Austerity is underway– but cost is high

4

6

8

10

12

Feb 01 Feb 05 Feb 09 Feb 13

% Unemployment in EU% of labour force


At least US heading in right direction

3

6

9

12

Feb 07 Feb 08 Feb 09 Feb 10 Feb 11 Feb 12 Feb 13

%Unemployment in US

% of labour force


As global economic engine splutters

0

3

6

9

12

15

Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12

%pa

MOSPI; National Bureau of Statistics of China

GDP growth% change on previous year

India China


But our neighbours are good mates

0

1

2

3

4

5

6

Dec 02 Dec 04 Dec 06 Dec 08 Dec 10 Dec 12

%pa

Australian Bureau of Statistics

Australian GDP growthannual % change


Business environment remains tough

-8

-4

0

4

8

12

16

Agriculture Business Households

%Change in sector credit

Jan 2013 cf Jan 2009


As banks restore their reserves

4

5

6

7

8

9

Jan 05 Jan 07 Jan 09 Jan 11 Jan 13

%Banking sector balance sheet

reserves as % of total liabilities


So business investment remains subdued

2.0

2.5

3.0

3.5

4.0

Jan 03 Jan 05 Jan 07 Jan 09 Jan 11 Jan 13

milion m2

Non-residential building consents12-month total area


At least house building recovery is underway

10

15

20

25

30

Jan 07 Jan 09 Jan 11 Jan 13

000s

New house consents12-month totals


while consumers remain cautious

0

4

8

12


%Electronic card transaction values

12-month % change on year earlier


... but, are still spending

0

4

8

12


%Electronic card transaction values

12-month % change on year earlier

MV sector excl fuel


Motor - challenges

100

150

200

250

Feb 05 Feb 07 Feb 09 Feb 11 Feb 13

000sMotor vehicle registrations

annnualised totals


• legislative* safety (older vehicles?)* environmental standards* WOF changes

• household income pressures• roading investment pressures• public transport options

Motor - challenges


Business size in motor industry

0%

20%

40%

60%

80%

100%

Motor

Composition of motor industry

10+ employees

6 to 9 employees

1 to 5 employees

self-employed


With a few good stories

0

3

6

9

12

15


$bn

Statistics NZ

Dairy export receipts12-month totals


Another promising story

0

1

2

3


$bn

Forestry export receiptsannualised totals


… and another …

0.0

0.5

1.0

1.5


$bn

Wine export receipts12-month totals


Next to an average story …

3

4

5

6


$bn

Meat export receipts12-month totals


4

5

6

7

8

Sep 03 Sep 06 Sep 09 Sep 12

$bn

Statistics NZ; BERL calcs

Tourism export revenuesannualised totals

Or, a not so good story


But, our houses are worth more

150

200

250

300

350

400

Jan 03 Jan 05 Jan 07 Jan 09 Jan 11 Jan 13

$000s

REINZ

Median house sale price3-month average


And so are our Kiwi dollars!

45

52

59

66

73

80

Feb 01 Feb 04 Feb 07 Feb 10 Feb 13

IndexNZ$ TWI exchange rate

monthly average


So export sector struggles

20

30

40

50


$bn

Merchandise export receipts12-month totals


As our Achilles Heel imposes more pain

NZ debt in Sep 2008 = $149.9bn

NZ debt in Sep 2012 = $148.8bn

Progress in rebalancing NZ economy

-16

-12

-8

-4

0

4

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

% of GDP Current account balance of BoPas % of GDP


The hard yards ahead …

“Looking beyond our present circumstances, our future depends on our ability to export.”

Budget Speech, June 1978


Economics is …

liquidityswap rates

house pricesinterest rates

inflationleverage

debthedge funds

ratings


A lesson in rocket scienceor Economics 101

wealthcreation

investmentspending

resourcedevelopment

exportincome


Challenges in the ‘new’ normal

• climate change

• energy (& related raw materials)

• water

• food

• skilled labour

making

new ‘friends’

or

‘relatio

nships’


So, (when/how) will it end?


NZ 2002 population

144151157

145132

124141

148148

132122

9882

6458

4324

114

138142

150140

131131

154158156

136123

10085

6863

5540

2412

200 150 100 50 0 50 100 150 200

Under 55–9

10–1415–1920–2425–2930–3435–3940–4445–4950–5455–5960–6465–6970–7475–7980–8485–89

90+

000s

females males

man drought


NZ 2012 population

161148148

161171

149134135

149152

147128

11692

7250

3719

8

152141142

152159

149143

148164163

156134

12197

7958

4731

18

200 150 100 50 0 50 100 150 200

Under 55–9

10–1415–1920–2425–2930–3435–3940–4445–4950–5455–5960–6465–6970–7475–7980–8485–89

90+

000s

females males

but the next 25 yrs ???

The post-crises world or, the new normal

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The post-crises world or, the new normal