World water markets: High investment requirements mixed with institutional risks

June 1, 2010

World water markets: High investment requirements mixed with institutional risks

Region:

International

Further research articles

Topic:

Economic and european policy, Sectors and resources

Analyst:

Eric Heymann

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The world’s water markets are confronted with major challenges. The increase in the world's population and higher incomes in developing countries and emerging markets are going hand in hand with a rise in demand for food, energy and other goods. This is resulting in increased demand for water. Climate change will amplify many water-related problems and create new ones. We put the annual investment required in the global water sector at about EUR 400-500 bn. Governments will not be able to raise the funding needed on their own. For this reason, we believe it makes sense for governments and the private sector to cooperate more closely. Makers of “water technologies” will have huge sales potential awaiting them in the coming decades. We have used a scoring model to rank the attractiveness of various countries for investments in the water industry. Among the economies that ranked best are many countries from the Middle East, but also the heavily populated countries of China and India as well as the US and Germany. In principle, though, all countries require a substantial amount of investment in the water sector. [more]

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Research Briefing: BRIC sovereign wealth funds: The external wealth of governments

September 24, 2010

Analyst:

Markus Jäger

Further research articles

BRIC FX reserve accumulation continues (apace). As far as the BRICs are concerned, FX reserve accumulation is increasingly difficult to justify in terms of “risk insurance“: all four BRIC governments are net foreign (currency) creditors. Even if private-sector debt is included, national balance sheets look strong as far as solvency and liquidity are concerned. The performance of the BRICs throughout the crisis has also demonstrated their resilience, if not in terms of growth, at least in terms of financial stability. [more]

Understanding China’s consumers

September 1, 2010

Analyst:

Syetarn Hansakul

Further research articles

The goal of this study is to shed light on Chinese consumers’ evolution and behaviour as well as on the composition of this heterogeneous group. China’s urban consumers are growing in number and in spending power, and their outlook is promising. On the other hand, the potential of rural consumers must still be developed, and their income gap with the urban counterparts narrowed. Policies to support income growth, increase disposable income, and help households grow their wealth are starting to be implemented. These policies, coupled with China’s attractive long-term growth prospects, bode well for China’s consumers, who in a few decades could turn out to be the world economy’s key growth driver. [more]

Research Briefing: Yuan as a reserve currency: Likely prospects & possible implications

July 16, 2010

Analyst:

Markus Jäger

Further research articles

Following the creation of EMU, some observers predicted that the euro would emerge as the world’s major reserve currency. More recently, eurozone travails and rapidly rising US indebtedness have re-ignited the debate about alternative reserve currencies (incl. SDRs). Among the possible medium-term contenders for “top currency” status are the yuan and the euro. Neither the UK nor Switzerland, nor Japan, have or will have the necessary economic and financial size for their currencies to become the world’s dominant reserve currency. ... [more]

Homo economicus – or more like Homer Simpson?

June 29, 2010

Region:

International

Topic:

Macroeconomics

Analyst:

Stefan Schneider

Further research articles

In real life people do not always decide rationally on the basis of established preferences and complete information. Much of their behaviour is caused through their trying to cope with the complexity of the world around them by approximating. As a rule these approximation methods deliver serviceable results, but they often also lead to distorted perceptions and systematic errors. To avoid making flawed decisions, investors and investment consultants should be aware of these effects when assessing financial products, when estimating factors of relevance to investment performance and their own appetite for risk, and when considering their personal investment behaviour. [more]

Research Briefing: Sino-US relations

May 17, 2010

Further research articles

According to a recent Pew poll, 41% of people believe that China is the world’s leading economic power, tied in first place with the United States. More revealingly, a recent Gallup poll showed that 44% of Americans believe that China is the world’s greatest economic power (only 27% named the US). The fact that the US was at the epicentre of the very global crisis that China appears to have weathered largely unscathed is bound to have contributed to this perception. [more]

Research Briefing: Direct fiscal cost of the financial crisis: Probably much lower than feared

May 14, 2010

Region:

International

Topic:

Banking and financial markets, Economic and european policy

Analyst:

Jan Schildbach

Further research articles

Final direct cost of the crisis for taxpayers may remain below 1% of GDP in most developed countries. This is only a small fraction of original commitments and also much lower than initial gross expenditures. Direct fiscal costs are in the end unlikely to exceed 2% in the US and 1% in Germany, while banking-sector rescue programmes in France and the UK might possibly even return a net gain. [more]

Brazil 2020: Economic & political scenarios - update

November 27, 2009

Analyst:

Markus Jäger

Further research articles

Brazil’s considerable improvement in economic fundamentals allowed the economy not only to recover quickly from the global financial crisis but also to put the country on a higher medium-term growth trajectory. According to our revised medium-term forecasts, medium-term GDP growth is likely to average 4.25% p.a., sustained by solid domestic demand growth. Based on these trends and against the background of lower interest rates and continued financial deepening, the domestic financial sector is set to thrive in the coming years. The 2010 presidential elections may bring about a slight shift in economic policy but economic stability is likely to be preserved. [more]

The global food equation: Food security in an environment of increasing scarcity

September 21, 2009

Region:

International

Topic:

Economic and european policy, Macroeconomics, Sectors and resources

Analyst:

Claire Schaffnit-Chatterjee

Further research articles

Production, distribution and access to food are being redefined by new and ongoing forces. Increased scarcity of natural resources, growing demand for food, changing nature of consumption and climate change are posing serious challenges to ensuring food security for the next decades. Still, we believe that the 9 billion of us in 2050 can be fed provided that we make the right decisions. Cross-sectoral innovation is essential, as well as changes to the current systems for producing, distributing and consuming food. Reforms are also crucial in the areas of agricultural support, food aid, trade liberalisation, support regimes for biofuels and intellectual property rights. [more]

Emerging Asia's middle class - a force to be reckoned with

August 21, 2009

Analyst:

Syetarn Hansakul

Further research articles

Over the past months hopes have been rising that the Asian consumer will replace the US as “world consumer of last resort”. Although this seems unlikely in the foreseeable future, the emergence of a large and dynamic middle class raises Asia’s profile as an attractive market. In this overview report we take a look at how the region’s middle class has developed and how the global economic crisis is likely to affect it, and discuss some definition problems associated with the at first sight straight-forward concept of "middle class". [more]

African frontier capital markets: More than a flash in the pan

July 31, 2009

Analyst:

Marion Mühlberger

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]

Is the next global liquidity glut on its way?

July 30, 2009

Region:

International

Topic:

Banking and financial markets, Economic and european policy

Analyst:

Sebastian Becker

Further research articles

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]