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  • Predictions for the UK economy in 2016 from John Hawksworth: PwC
    The CEO agenda CEO insights blog Careers About PwC Technology careers Employer of choice Our history PwC Professional Employability Aspire to lead PwC s series on leadership and gender equality Country job search Explore careers with Strategy Press room Facts and figures Press contacts Analyst relations Global International PwC Sites Commonly visited PwC sites Global Australia Brazil Canada China Hong Kong France Germany India Italy Japan Mexico Middle East Netherlands Russia Singapore South Africa South Korea Spain Sweden Switzerland United Kingdom United States Complete list of PwC territory sites Predictions for the UK economy in 2016 from John Hawksworth Chief Economist PwC UK Download Predictions for 2016 G7 on steadier footing than the E7 The UK economy should remain one of the strongest in the G7 with continued steady real GDP growth of around 2 2 5 in 2016 Consumer spending and private sector services will remain the main drivers of this growth but the manufacturing sector could continue to lag behind Fiscal policy will provide only a modest drag on growth in 2016 after the Chancellor softened his planned spending cuts in the Autumn Statement We expect average UK house prices to rise by around 5 7 in 2016 comfortably outstripping consumer price inflation of around 1 and average earnings growth of around 3 Generation rent will continue to find it hard to get on the housing ladder particularly in hot spots like London Oxford and Cambridge Assuming no major adverse global shocks we expect the Bank of England to begin to raise interest rates gradually at some point during 2016 reaching 1 by the end of the year Today s issues The economy Global Economy Watch Predictions for 2016 Projections Archive Video archive Contacts Richard Boxshall Senior Economist Tel 44 0 20 731 32079 Email Barret Kupelian Economist

    Original URL path: http://www.pwc.com/gx/en/issues/economy/global-economy-watch/uk-economy-predictions.html (2016-02-10)
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  • Global Economy Watch Projections , Economic Outlook: PwC
    25 4 4 2 4 5 4 8 4 8 0 5 2 3 2 8 3 2 United States 15 9 22 5 2 6 2 8 2 6 2 3 0 1 1 4 1 9 2 0 China 16 6 13 4 6 9 6 5 6 0 5 7 1 5 1 8 1 8 2 8 Japan 4 4 6 0 0 7 1 3 1 3 1 0 0 8 0 9 1 1 1 4 United Kingdom 2 4 3 8 2 2 2 2 2 3 2 3 0 0 1 2 1 9 2 0 Eurozone 12 2 17 4 1 5 1 6 1 7 1 6 0 1 1 1 0 9 1 4 France 2 4 3 7 1 2 1 3 1 6 1 6 0 1 1 2 0 0 1 2 Germany 3 4 5 0 1 5 1 7 1 6 1 4 0 2 1 3 1 5 1 7 Greece 0 3 0 3 2 2 1 4 2 7 2 5 0 4 0 1 1 4 1 4 Ireland 0 2 0 3 6 7 5 5 4 3 2 5 0 0 1 0 1 5 1 7 Italy 2 0 2 8 0 7 1 3 1 2 1 2 0 2 0 7 1 0 1 4 Netherlands 0 7 1 1 2 0 1 8 2 2 1 8 0 3 1 2 1 5 1 3 Portugal 0 3 0 3 1 5 1 6 1 7 1 2 0 5 0 8 1 4 1 6 Spain 1 4 1 8 3 1 2 6 2 3 2 0 0 6 0 8 1 0 1 2 Poland 0 9 0 7 3 5 3 4 3 4 3 6 0 9 0 9 1 3 2 5 Russia 3 3 2 4 3 8 0 5 1 0 1 5 15 6 8 9 7 3 4 0 Turkey 1 4 1 0 3 2 3 0 3 2 3 5 7 6 7 2 6 7 6 5 Australia 1 0 1 9 1 7 2 7 2 9 2 9 1 7 2 5 0 0 2 5 India 6 8 2 7 7 3 7 7 7 7 6 5 5 0 5 2 4 3 5 0 Indonesia 2 5 1 2 5 2 3 6 4 6 5 4 6 8 6 1 0 0 5 1 South Korea 1 6 1 8 2 6 3 1 3 6 3 5 0 8 1 5 1 8 3 3 Argentina 0 9 0 7 2 0 1 7 2 3 2 5 17 0 25 0 25 0 20 0 Brazil 3 0 3 0 2 9 0 9 1 4 3 0 9 0 7 5 5 0 5 0 Canada 1 5 2 3 1 3 2 0 2 3 2 2 1 1 1 7

    Original URL path: http://www.pwc.com/gx/en/issues/economy/global-economy-watch/projections.html (2016-02-10)
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  • Global Economy Watch monthly macroeconomic publication by PwC
    careers with Strategy Press room Facts and figures Press contacts Analyst relations Global International PwC Sites Commonly visited PwC sites Global Australia Brazil Canada China Hong Kong France Germany India Italy Japan Mexico Middle East Netherlands Russia Singapore South Africa South Korea Spain Sweden Switzerland United Kingdom United States Complete list of PwC territory sites Economic update The ECB continues to buy time for governments to press ahead with reforms Download Global Economy Watch December 2015 Eurozone inflation remains below target Nine months have now passed since the European Central Bank ECB began its quantitative easing QE programme Inflation however still remains below target see Figure 2 To boost economic activity and get inflation back to target Eurozone policymakers took further action in December by Decreasing the deposit rate from 0 2 to 0 3 Extending the existing QE programme by six months to at least March 2017 Close Eurozone credit is still growing at slow rates In a recent speech an ECB Executive Board member argued the success of its monetary policy measures hinges on household and corporations taking up cheap loans which would then spur economic activity and inflation The data shows that some but not enough progress has been made on this front In the Eurozone credit growth to households and non financial corporations NFCs is growing at 1 2 year on year compared to 7 9 in the US and 6 8 in the UK although the last two are at a more advanced stage of their adjustment cycle However this aggregate figure for Eurozone credit growth hides the disparity of lending between various sectors of the economy In Spain for example credit growth to businesses continues to contract However consumer credit grew by 3 8 year on year which has helped fund consumer spending as

    Original URL path: http://www.pwc.com/gx/en/issues/economy/global-economy-watch/december-2015.html (2016-02-10)
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  • Paris climate summit: Deal talks driving policy and financial sector developments: PwC
    include a process to review progress and increase emissions reduction in the future There s economic potential and implications for both emerging and developed economies E7 critical to meeting global targets In our Low Carbon Economy Index we track the progress of the G20 which account for around 85 of global emissions in decarbonising their economies On the whole the E7 reduced their carbon intensity at a faster rate than the G7 in GDP weighted average terms but as the E7 grows economically their need to limit emissions growth would also increase Currently the E7 account for 35 of global GDP in PPP terms but our World in 2050 report projects that this could rise to around 46 by 2050 As Figure 3 shows China the world s biggest emitter of greenhouse gases achieved an impressive 6 rate of decarbonisation last year and has pledged to reduce its carbon dioxide emissions per unit of GDP by 60 65 in 2030 compared to 2005 levels India the world s third biggest emitter has pledged to reduce its emissions per unit of GDP by 33 35 in 2030 Meanwhile Brazil has committed to an absolute reduction in its CO 2 emissions by 43 by 2030 Close Post Paris all eyes will be on national governments to create the right policy framework needed to deliver these commitments Our analysis shows that it could channel at least 5 10 trillion investment into low carbon sectors and create at least 20m 45m jobs around the world as a result over the next 15 years Financial services fuelling green technology expansion Whatever the detail of a deal in Paris it will mean more green investment will be needed Pledges already made by each country require significant levels of private and public investment 700bn PA in the EU and China alone and particularly in emerging economies For banks and other credit allocating institutions there will be considerable opportunities to fund these projects and provide credit We have already seen this happen in India and China where companies have tapped into debt markets to fund their transitions to clean energy supplies Additionally a global bank pledged to invest 1bn via debt markets to boost its investments to tackle climate change will mean treading new ground There is however a limit to the amount that can be financed with bank debt given increasingly stringent capital requirements that financial institutions face Capital markets will need to scale up and for that to happen financial structures will need to be created that meet the risk return requirement and innovative new financial models will need to be created In China whose pledges include plans to accelerate the transition from an economy based on fossil fuels to one built on clean energy authorities have signalled that they want to explore new investment and financing mechanisms for low carbon developments including public private partnerships Looking towards the medium to long term financial sector firms are beginning to incorporate the impact of climate change in

    Original URL path: http://www.pwc.com/gx/en/issues/economy/global-economy-watch/paris-climate-summit.html (2016-02-10)
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  • Will consumers behave like Santa or Scrooge during Christmas?: PwC
    businesses So how have consumer spending patterns fared recently Some peripherals spending faster than Germany Figure 1 shows real consumer spending trends in a range of advanced economies for the period starting in 2012 Consumer spending growth is in the 2 4 range in real year on year terms for most of these economies which is a respectable figure In some cases such as the US and France consumer spending is growing faster than GDP Close Households are savings less Figure 4 shows how the two key drivers of consumer spending real disposable income growth and the savings ratio have moved Most of the economies in our sample are in a sweet spot where real disposable incomes have grown and savings ratios have decreased both of which boost consumer spending growth Close In the US and UK savings ratios have declined as households have reduced their debt burden from pre crisis levels In addition house prices have recovered which has made consumers more confident In the US for example the S P Schiller House price index is at a 93 month high Germany seems to be the exception amongst the large advanced economies as its savings ratio has increased despite rising incomes As a result German real consumer spending growth has remained relatively modest at around 2 but are also enjoying higher gross incomes Gross disposable incomes have also grown as employment growth has picked up most notably in the US UK and Germany where around 9 million jobs have been created in total since the second quarter of 2012 Employment in Ireland and Spain is also markedly higher than in 2012 Q2 which has supported moderate income growth Lower prices for imported food and energy have also pushed real incomes higher across the Eurozone Figure 4 shows that Greece and Italy are in the squeezed zone of lower incomes and smaller savings ratios In the case of Greece Figure 1 shows that consumer spending is growing strongly but this is driven by a large reduction in the savings ratio This suggests that the consumer spending recovery there could be short lived unless disposable incomes also pick up Where have they spent the money Our analysis of retail trade data across four European economies shows that the consumer spending recovery has been felt across a broad range of product categories Table 1 shows that retail turnover volumes for income sensitive categories for example communication household equipment and leisure which includes spending on recreation and culture grew in all four European economies However retail turnover volumes for necessities such as food grew at a slower pace compared to the total as indicated by yellow rather than green circles in Table 1 In the UK and Ireland retail turnover on household appliances grew strongly which is associated with the recoveries seen in their housing markets in recent years Close Prospects for consumer spending Going forward we see a positive outlook for consumer spending in most of the advanced economies we track If

    Original URL path: http://www.pwc.com/gx/en/issues/economy/global-economy-watch/will-consumers-behave-like-santa-or-scrooge-during-christmas.html (2016-02-10)
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  • Global Economy Watch monthly macroeconomic publication by PwC
    Germany India Italy Japan Mexico Middle East Netherlands Russia Singapore South Africa South Korea Spain Sweden Switzerland United Kingdom United States Complete list of PwC territory sites Economic update Will India be the world s next big services exporter Download Global Economy Watch November 2015 India above China in GDP growth league table For the first time since 1999 India s GDP growth is expected to overtake that of China in 2015 see Figure 2 As we have mentioned in our World in 2050 1 publication long term growth projections suggest that India will be growing faster than China for the foreseeable future as an ageing population and a gradual reduction of the catch up effect weighs down on China s growth potential But what does this mean for businesses India is gearing up to be a services powerhouse In the past decade Chinese growth was focused around manufacturing Trade figures and business experience suggest that China has a comparative advantage in the sector as it is a net exporter of goods For Western businesses most opportunities have historically focused on incorporating Chinese manufacturers into their supply chain Should we expect the same for India as it starts to grow faster India is the reverse of China as it a net importer of goods and a net exporter of services This suggests that its comparative advantage may lie in the services sector and that the short to medium term business opportunities in India may focus more in services Manufacturing might still stage a turnaround in India The current administration has promised a set of ambitious infrastructure reforms which could act as a growth impetus to the sector But recent experience shows that it is difficult to push through regulatory reforms and raise finance for large scale infrastructure projects so it

    Original URL path: http://www.pwc.com/gx/en/issues/economy/global-economy-watch/november-2015.html (2016-02-10)
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  • Global Economy Watch monthly macroeconomic publication by PwC
    mid 1980s onwards One key difference however is the policy response Whereas in the past low oil prices eventually led to deep government spending cuts current fiscal adjustment plans in most GCC economies have been far too modest compared to what is required which explains the large adverse swings seen in public finances as shown in Figure 4 Close The situation though is manageable One way to fund deficits would be to use up fiscal buffers sheltered in central banks and sovereign wealth funds which were borne out of reforms implemented after the decade long low oil prices after the mid 1980s This however is only a short term fix Fiscal buffers are finite and some assets are ring fenced As the IMF has pointed out fiscal buffers for some GCC economies are expected to run out in less than a decade 2 Public finance reform back on the agenda Raising taxes could be one policy option In practice however it would be difficult to set up complicated tax systems particularly in jurisdictions where households and corporations are used to a low tax environment So the alternative is to rein in government spending gradually by setting up or strengthening medium term expenditure frameworks MTEFs as recommended by the World Bank and the International Monetary Fund IMF Canada and Australia are examples of commodity rich economies which have managed to get public finances under control in the past and reduce reliance on commodity sector revenues So what are the benefits of setting up a MTEF Medium term planning could reduce budget over runs First it sets hard constraints on government spending Doing so forces policymakers to plan spending using a multi year rather than a single year time frame Even though this comes with some short term costs e g the government spending time and money to enhance its macro forecasting capabilities it helps to ensure that budget over runs which are a common problem in some net oil exporters see Figure 5 are reduced over time Close In fact the World Bank estimates that fiscal balances improve on average by around 2 6 percentage points of GDP in the three years after implementing a MTEF and reduce fluctuations in government spending Second MTEFs help delink government spending from the economic cycle Canada one of the world s largest oil producers has managed to do this successfully Setting fiscal rules and independent institutions to monitor and where necessary critique government spending plans is one aspect of a fiscal framework that would be welcome in some GCC economies If done properly this could make public finances more credible to international investors and rating agencies Figure 6 shows that sophisticated MTEFs are associated with lower risk premiums on financial assets which has positive knock on impacts on both the public and private sectors Close But don t lose sight of the bigger challenge Third MTEFs link the government s budget to the country s long term economic plan by targeting and prioritising spending

    Original URL path: http://www.pwc.com/gx/en/issues/economy/global-economy-watch/public-finance-reform.html (2016-02-10)
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  • Global Economy Watch monthly macroeconomic publication: PwC
    institutional and regulatory framework of how households and businesses behave in the market that might be driving this trend So how have these economies fared as far as business specific structural reforms are concerned To answer this question we have compared the rankings of the emerging economies in our sample over the past five years using the Ease of Doing Business Index EODB compiled by the World Bank This index measures and ranks economies based on the regulations that enhance business activity and those that constrain it At a high level the results suggest that Mexico is the highest ranked economy 38th position ranking higher than OECD economies like Greece Italy and Belgium Conversely India is the lowest ranked economy out of our sample 130th position Most of the large emerging economies have progressed with reforms Figure 3 suggests that all but two of the emerging economies in our sample pressed ahead with reforms to enhance their business activity levels over the period Close China and Mexico are the only two economies that recorded a slight decrease in their overall rankings over the period The big picture message though is that the structural reform agenda with respect to businesses has been progressing in most of the E7 over the past five years But the devil lies in the details Insolvency frameworks have improved The biggest area of improvement recorded in the emerging economies in our sample is in the resolving insolvency category For example Indonesia and Brazil improved their rankings in this area by around 40 positions over the period To achieve this insolvency frameworks were strengthened to make sure that secured creditors achieved the highest recovery rate possible in cases of corporate bankruptcies Countries which have improved their insolvency framework correlate positively well with those that improved their rank

    Original URL path: http://www.pwc.com/gx/en/issues/economy/global-economy-watch/structural-changes-in-emerging-economies.html (2016-02-10)
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