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Global Construction Outlook - IHS Markit

Global Construction Outlook Scott Hazelton Director of Construction Services Global Shock Waves The double-shock world economy . subprime crisis plus record-high oil prices Crisis status we are not out of the woods yet Global transmission of crisis no de-coupling Crisis management shifting into high gear Global inflation how big of a threat? Weaker growth in the developed economies . Means that emerging markets will eventually slow as well The risks are predominantly on the downside Copyright 2008 Global Insight, Inc. 2. The World's Economic Expansion Is Slowing 6.

• Powerhouse of global growth: 2002–06 average growth 7.0%; 8.0% in 2007 (excl. Japan) • BOP positions have strengthened, debt burdens have eased, strong fiscal positions

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Transcription of Global Construction Outlook - IHS Markit

1 Global Construction Outlook Scott Hazelton Director of Construction Services Global Shock Waves The double-shock world economy . subprime crisis plus record-high oil prices Crisis status we are not out of the woods yet Global transmission of crisis no de-coupling Crisis management shifting into high gear Global inflation how big of a threat? Weaker growth in the developed economies . Means that emerging markets will eventually slow as well The risks are predominantly on the downside Copyright 2008 Global Insight, Inc. 2. The World's Economic Expansion Is Slowing 6.

2 Real GDP. Industrial Production 5. 4. Percent change 3. 2. 1. 0. -1. -2. 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012. Copyright 2008 Global Insight, Inc. 3. A Two-Speed World: Real GDP Growth Developed (OECD) Countries Emerging Markets Percent Change - 1990 1993 1996 1999 2002 2005 2008 2011. Copyright 2008 Global Insight, Inc. 4. Wide Variations in Regional Economic Growth 9. 2006. 8 2007. 2008. 7 2009. Real GDP, Percent change 2010. 6. 5. 4. 3. 2. 1. 0. NAFTA Western Japan Other Emerging Mideast - Other Europe Asia Europe N.

3 Africa Americas Copyright 2008 Global Insight, Inc. 5. Output Gaps Show Little Spare Capacity 5. Total OECD. 4. United States Gap as Percent of Potential Real GDP. 3 Eurozone Japan 2. 1. 0. -1. -2. -3. -4. 1990 1993 1996 1999 2002 2005. Source: OECD. Copyright 2008 Global Insight, Inc. 6. Eurozone: Real GDP Growth Eurozone Real GDP, Percent change 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010. Copyright 2008 Global Insight, Inc. 7. Real GDP Growth Rates Vary Across Europe 2006. 2007. 2008. 2009. 2010. Real GDP, Percent change France Germany Italy Spain Copyright 2008 Global Insight, Inc.

4 8. Asia: Cyclical Peak Powerhouse of Global growth: 2002 06 average growth ; in 2007 (excl. Japan). BOP positions have strengthened, debt burdens have eased, strong fiscal positions . more resilience to shocks Big plus: investment and private consumption are finally recovering Slowdown will be moderate, but risks have increased No true de-coupling . Inflation is a problem: currency appreciation a better policy option than interest rate hikes Copyright 2008 Global Insight, Inc. 9. Japan: Sluggish Growth Ahead Japan Real GDP, Percent change 2004 2005 2006 2007 2008 2009 2010 2011.

5 Copyright 2008 Global Insight, Inc. 10. Real GDP Growth in Asia-Pacific Economies 2006. 2007. 2008. 2009. 2010. Real GDP, Percent change China India South Korea Australia Taiwan Copyright 2008 Global Insight, Inc. 11. Real GDP Growth in Asia-Pacific Economies 2006. 2007. 2008. 2009. 2010. Real GDP, Percent change Indonesia Hong Kong Malaysia Singapore Philippines Thailand Copyright 2008 Global Insight, Inc. 12. China: The Double Squeeze . Economy could be squeezed domestically and externally Monetary policy tightening has started Exports to the United States already slowing Policy dilemma exports and investment/inflation in different phases of cycle, and require countering policies Without inflation risk, Beijing is willing to continue loose monetary policy to cushion the impact of sliding exports Asset bubbles may also be a threat Risks of a boom-bust are still 35% to 40%.

6 Copyright 2008 Global Insight, Inc. 13. China's Current Business Cycle Is Relatively Mild 25. Real GDP. 20 GDP Deflator 15. Percent Change 10. 5. 0. -5. 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010. Copyright 2008 Global Insight, Inc. 14. Emerging Europe: Robust Despite Deteriorating External Environment While exports have been supportive, domestic demand has been driving output growth Central Europe continues to expand share of key Western European markets as FDI boosts export capacity, productivity Baltics, Balkans show signs of overheating; tighter Global credit conditions could help orchestrate a softer landing Russia, other energy exporters in CIS riding world market oil prices.

7 Domestic demand will continue to grow rapidly, but surging imports trimming external surpluses Copyright 2008 Global Insight, Inc. 15. Real GDP Growth in Emerging Europe 2006. 2007. 2008. 2009. Real GDP, Percent change 2010. Russia Turkey Poland Czech Hungary Romania Republic Copyright 2008 Global Insight, Inc. 16. Latin America: One Region, Two Stories Mexico, Central America, and Colombia: the United States is their main trading partner Rest of South America: a commodities story Strong demand from the rest of the world will continue to support high growth rates in an environment of relative capital intensive exports The Latin American region is now better prepared to avoid crisis contagion.

8 But while the vulnerability to external finance is less, the vulnerability to external demand is substantial Parts of the region are vulnerable to a China hard landing Copyright 2008 Global Insight, Inc. 17. Real GDP Growth in Latin America 2006 2007 2008. 2009 2010. Real GDP, Percent change Argentina Brazil Chile Colombia Mexico Peru Venezuela Copyright 2008 Global Insight, Inc. 18. Middle East / North Africa Maybe a Bust, But Not Now MENA's current economic boom will not falter this year it is actually intensifying Even an oil crash will not immediately affect the region's economy, thanks to improved fundamentals However, the boom has strained the economy's capacity, leading to increasingly severe overheating Sectors hurt most by capacity limits: energy, utilities, housing, Construction , and manufacturing The boom may be headed for a bust, but not in 2008.

9 Copyright 2008 Global Insight, Inc. 19. MENA Fiscal Balances Are Strongly Positive . 12. Middle East & North Africa 7 Middle East Fiscal balance, (Percent of GDP). North Africa 2. -3. -8. -13. -18. 1990 1993 1996 1999 2002 2005 2008. Copyright 2008 Global Insight, Inc. 20. Large External Assets Can Cushion Any Oil Price Shock . MENA External Asset Stocks, (trillions of dollars). MENA, External Asset Stocks 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008. Copyright 2008 Global Insight, Inc. 21. Region is Overheating, Making a Boom-Bust Worrisome 10.

10 9 MENA. Middle East 8 North Africa CPI Inflation, (percent). 7. 6. 5. 4. 3. 2. 1. 0. 2000 2001 2002 2003 2004 2005 2006 2007. Copyright 2008 Global Insight, Inc. 22. Real GDP Growth in the Middle East and Africa 2006. 2007. 2008. 2009. 2010. Real GDP, Percent change Saudi Arabia South Africa Iran UAE Israel Nigeria Copyright 2008 Global Insight, Inc. 23. Total Construction Regional Review 350. World Asia 300 Non-Japan Asia Western Europe Eastern Europe 250. Index, 1998 = 100. North America South America Middle East & Africa 200. 150. 100. 50.


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