2010 Global Economic Outlook

After a harrowing and catastrophic global recession inemerging economies will post a greater than 5%
2009 will 2010 bring brighter promises? The world is inexpansion. Global trade will remain weak in 2010,
recovery, though the healing will most certainly not begrowing by 3.7%. Figures indicate that many countries
quick and best business practices will not resemblewill raise trade barriers as currently they are well
anything we have been exposed to over the past 3below WTO trade limits. E-commerce will grow by
generations. In fact, the most traditional business5.5%, "green" efforts will be subject to continuing
practices are now replacing the most "moderncompromises by the Obama administration and cannot
business practices" to put it lightly. So polish off yourbe looked at as a significant business opportunity this
great grandfather's diary and get to studying bestyear. Bank loans will rise, by 5.9% globally but will still
business practices for 2010 and beyond.amount to less than projected. After a terrible 2009,
In this issue I will briefly highlight the causal variables ofprivate-equity firms will find more quality buy out
the 2008 global financial collapse and continue on inopportunities this year. After a 16% drop in construction
greater depth about the emerging trends for 2010. I willin 2009, we are set to drop another 12% in 2010
point to some countries I feel will lead the world out ofaccording to the American Institute of Architects.
recession and where I think you should consider puttingHotels, shopping centers and corporate offices will be
forth your business energies. On behalf of DCGthe hardest hit, while infrastructure projects will show
Advisors worldwide I sincerely thank those of youthe greatest development. Current government
who took the time to answer our year-end report cardrhetoric points to the prospect that just as government
survey. In honor of the value you brought to thisspending tapers off, America is set to raise taxes
newsletter I have structured this issue according tosharply on high earners and investment income, further
your wishes and hope that throughout the year I canslowing recovery. History shows clearly that this can
continue to improve upon our services to you.be dangerous. In both America in 1937 and Japan in
THE WORLD SNAPSHOT1997, ill timed tax increases sent fragile economies
Over this past year and half, Companies haveback into recession. Businesses and business owners
suffered a long and ferocious beating. Many havewill need to figure out a way to avoid this same peril
expired. Those that remain will emerge the strongestless suffer the same fate. I recommend employing the
and be the most durable over changing economic flux."Sword and Shield" strategy whereby the sword
Purely entrepreneurial firms will displace traditionalsymbolized aggressive efforts in these first two
market leaders. Contribute this to their ability to quicklyquarters to move product while the shield indicates a
respond to turbulent economic signals, and changedefensive posture in the last two quarters to save
direction more rapidly than the larger more anchoredcash. For example, a more concentrated program
firms. America was the first country to stumble intoshould be deployed to save dollars in quarters 3 and 4
recession and it will be among the first countries toof 2010 in anticipation of a strong first 2 quarters of
pick it-self back up though it will not be the top2011.
performer nor will it lead the world out of the collapse.Companies should focus the bulk of their efforts on
This task falls unto the 12 less exposed economiesbalancing the need for short-term looseness and
which I will discuss later.medium term prudence and reach out to a frugal
CAUSAL VARIABLESconsumer and incorporate a good citizenship program
In 2009, world output shrank by more than 1% (on ato reach out to their communities. Deflated customers
purchasing power parity basis). This marked the firstneed you, the business owner, to show them you care.
time the global economy actually got smaller sinceTOP 12 COUNTRIES TO LEAD THE RECOVERY
1945. In addition to the most common variables we2010 is a terrific time to expand and here I identify the
have seen reported in the news and "heard it on thetop 12 countries worthy for consideration in your
street" sources, the fact remains, through 2009expansion strategies for this year. First, look for
households had lost over $12 trillion or 19% of theirIndonesia to replace Russia on the global stage. I
wealth because of the collapse of housing and stocksubmit that the BRIC's will be replaced by the BICI's.
prices. Consequently this sapped their ability to provideThe Eastern European myth of fast recovery was
strong purchasing power as most people are nowentirely over-rated. Listed next are our unlikely heroes
focusing on saving rather than spending. As such,of 2010. Qatar will post a 24.5% increase to its GDP
consumer spending which contributes about 70% offollowed by China at 8.6%. Congo and Turkmenistan
GDP will necessarily grow more slowly than theare in third place with an 8% GDP growth projected.
statistical bureaus are projecting. High unemploymentEthiopia and Uzbekistan show promise with a 7%
will hold back wage gains for at least 2 years toprojected GDP growth succeeded by Djibouti at 6.5%.
come, wage cuts are already commonplace. InflationSri Lanka and India are in a respectable tie for 8th
may slip to zero and possibly set off a deflation spoutplace indicating a 6.3% rise to GDP over 2009 while
which drives up real debt burdens and further saps aIraq, Madagascar and Vietnam all rate high touting a
consumer's ability to spend. The recovery felt during6% anticipated growth.
the latter half of 2009 was artificial, though slightlyWHERE ELSE IS THERE PROMISE?
helpful, for 2 main reasons. Factories shut down at theThe much hyped up Poland will demonstrate a modest
first signs of a global contraction at the opening of1.9% growth and will be helped this year by rising
2009 but feverishly restocked nearly empty shelvesinvestment. Look for Poland to be a player in 2011.
beginning in the 3rd quarter. Second, massiveLithuania will sink another 4.5% after plummeting by
public-spending programs began feeding through to15% in 2009, their budget deficit will swell to 6.5% of
beleaguered organizations, taxes were temporarily cutGDP and hopes for adopting the Euro this year will
and interest rates were reduced. While this showed afade but not be entirely unattainable. Germany, France
positive impact on the slowdown it did nothing toand Italy will show modest and painfully slow increases
address the underlying problem of consumer spendingjust touching.5% this year. In Latin America look to
and purchasing power.Brazil, Chile, and Cuba to lead the recovery with
TRENDS FORECAST 2010greater than 3.5% GDP growth forecast in 2010.
In 2010 I forecast the following trends. While many2010 ADVICE
economist and optimists are wishing for a V-typeI made some bold predictions above; however, I'm
recovery, I anticipate the pattern to more resemble aalways an optimist about the future, but a realist in day
W. We will see strong healing signs in our first twoto day planning. This coming year will be challenging
quarters of 2010 and sharp pains will be felt in our lastand sometimes bring anxiety as we try to make
2 quarters, though the 4th quarter will be less painfulsense of all the experts making predictions for the
than the 3rd. We will bask in slight to moderatefuture. But we must remember that as leaders it is
recovery over the first two quarters of 2011 and feelimperative that we listen to and consider all opinions,
the sting of the second leg of our W in the last 2but deep down we need to focus on our business'
quarters of 2011. Global output will expand by onlycore strengths and continue to move forward with
3.2%, well below the 5% recorded in 2007. Richerrealistic expectations until the tea leaves change and
more developed countries will expand by 1.7% whilewe develop a clear vision for our company's future.