Further research articles

Despite the impact of the global crisis and periodic bouts of political turmoil, the theme of an African economic renaissance is not likely to vanish. Due to Sub-Saharan Africa's rich natural resource endowment, macro/structural improvements and increasing trade links with Asia we expect economic growth to rebound to the 5%-level over the next years. Thus, once the world economy recovers, interest in African frontier capital markets is set to rise again. While Nigeria, Ghana and Kenya are the most prominent countries in terms of size and capital-market development, Tanzania, Uganda and Zambia have strong potential as well. [more]

Some years prior to the crisis, abundant global liquidity and investors’ strong risk appetite boosted asset prices to very high levels. The state of the global economy and financial markets deteriorated dramatically when the subprime crisis turned into a full-blown global banking and economic crisis. Central banks around the world were forced to inject extra liquidity to support the banking sector, the credit channel and the overall economy. Despite the presence of global excess liquidity short and medium-term risks to CPI inflation appear to be limited because of low capacity utilisation and rising unemployment. However, excess liquidity could still potentially stoke new asset price bubbles. Central banks are aware of this risk and are at the moment preparing post-crisis exit strategies from their current accommodative monetary policy stance. [more]

Climate change constitutes a challenge for the global tourism industry. The result will be regional and seasonal shifts in tourist flows. There will therefore be winners and losers. The Mediterranean region will be one of the losers, while – among others – Denmark, Germany, the Benelux countries and the Baltic states may benefit. The impact of negative climate developments will be particularly strong if climate-sensitive tourism has major economic significance. In Europe this applies to Malta, Cyprus, Spain, Austria and Greece. At a global level, however, the tourism business will remain a growth sector. [more]

After four years of above-average growth the global economy is clearly slowing down. The US housing recession and high oil prices are dampening global economic growth, even though the substantial USD depreciation of the last two years, decisive and timely Fed action and the USD 150 bn fiscal package will prevent a US recession. Due to robust domestic demand and solid current account surpluses in many cases the emerging markets – contrary to previous shocks – are providing an element of stabilisation. Europe will be affected by the US slowdown with a lag while the strong currency continues to be a drag. [more]

The US current account has swelled to USD 811 bn, or 6.1% of GDP, at the last count. We do not believe that a deficit of this magnitude is sustainable in the long term. A reduction of the international imbalances still need not take place abruptly. After all, the US current account deficit is also the upshot of investment decisions in the surplus countries. A strengthening of domestic demand in Asia and stronger diversification efforts in the oil-producing countries aimed at reducing their reliance on oil revenues suggest that less capital will flow to the USA. The still fast-expanding trade in services also points to an improvement in the US current account in the longer term. Here, the USA is a frontrunner, which gives it a competitive edge. [more]

Global liquidity has become abundant over the past few years mainly owing to extremely accommodative monetary policies in the US, Euroland and Japan. Since this liquidity "glut" has barely shown up in consumer price inflation, it has likely contributed to asset price inflation. There are basically two scenarios for how global "excess" liquidity could be cut back over the medium to long term: (1) continued global monetary tightening or at least no monetary easing soon and (2) global nominal GDP expanding faster than the money stock over time. [more]

Countries with a high level of material prosperity are faced with the question of which priorities to set for the future and which objectives to target with their reform processes. One objective could be the happy variety of capitalism, which can be identified using the insights of happiness research. Countries of the happy variety are currently Australia, Switzerland, Canada, the UK, the US, Denmark, Sweden, Norway and the Netherlands. They are characterised by an array of commonalities such as low unemployment, a high education level, a high employment rate of older people and extensive economic freedom. [more]

Ageing does not directly impact the total shares of expenditures at the country level, although it will drastically affect the nature of demand within most consumption segments. In fact, economic growth is the main driver of change in the consumption structure, through rising levels of expenditures and shifts in relative prices. (Ageing is indirectly at play here through its effect on income distribution). Another important driver is societal transformation. Our projections show that, when all three drivers are factored in, transport, housing, health care and entertainment take larger expenditure shares at the expense of food.
The main household expenses will remain housing, transport, entertainment, and - still - food. [more]

Brazil has made substantial progress towards greater economic stability. A combination of greater macro-stability, increased investment and openness, and gradual economic reform will lead to higher medium-term economic growth. The natural resources sector stands to benefit disproportionately from the on-going structural changes in the world economy. Strong Chinese demand will provide Brazil with a great opportunity to increase exports and growth. High-tech niches where Brazil has achieved a competitive advantage will also benefit. If domestic structural reform continues and macroeconomic stability is maintained, the financial sector will be another "winner". [more]