PERDANA LEADERSHIP FOUNDATION CEO FORUM 2014 “IS THE WORLD HEADING

Transcription

PERDANA LEADERSHIP FOUNDATION CEO FORUM 2014 “IS THE WORLD HEADING
PERDANA LEADERSHIP FOUNDATION
CEO FORUM 2014
“IS THE WORLD
HEADING TOWARDS
ANOTHER FINANCIAL
CATASTROPHE?”
24 September 2014
AZMAN YAHYA
1
SIMPLE ANSWER IS YES
BUT
• WHEN?
• SEVERITY?
• FINANCIAL OR ECONOMIC OR BOTH?
TO GAUGE WE NEED TO LOOK AT TRENDS
Live Better !
2
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FOUR MAIN TRENDS TO CONSIDER
1. ECONOMIC CYCLES
2. GROWING DEBT
3. DIMINISHING INVESTMENT RATIO
4. RISING UNEMPLOYMENT
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3
The world economy bounces up and down but hit first truly global
recession in 2009 since WW2
4
Government debt has increased since the start of the crisis and is
expected to grow further in many countries
gggh
5
Risk of deleveraging
►
Global debt exceed $100 trillion in 2013
►
Government debt now stands at $54 trillion
►
US public debt is $14 trillion
($44,000 per every man, woman and child)
►
Deleveraging is inevitable but how do you stop a juggernaut without being
crushed?
6
Risk of induced inflation
►
The core view is US debt is so large that it cannot repay
►
Options:
•
•
•
•
Default (Argentina)
Haircut (Greece)
Austerity (state defaults on its own citizen)
Inflation (erodes the real value of public debt)
►
In 1946, US debt to GDP ratio was 108.6%.
But reduced by about 40% within a decade by inflation
►
50% of US public debt is owed to foreign creditors.
Inflation risk > lost of confidence > offloading > crash financial markets
7
Declining investment in developed economies reflects the ebbing
of a post-WWII investment boom in Western Europe and Japan
8
Global unemployment exceeded 200 million in 2013
9
What can trigger another financial crisis?
►
Weak oversight
►
Bursting bubbles
►
Inflation
►
Credit event
►
Loss in confidence in US$
10
NOT ALL BAD NEWS ☺
Shift in global economy
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11
12
Asia healthier than pre 1997 crisis
►
Asian central banks sitting on $6 trillion reserves
►
Many currencies no longer pegged
►
China moderating growth – move from high investment to more sustainable
consumption led growth
►
Potential for regional coordination - Asean + 3
13
Malaysia needs to put house in good/better order
►
Avoid temptation of easy credit and proliferation of shadow banking
►
Purposeful government spending to reduce public debt early
►
Shore up reserves
►
Change social fabric
►
Address inequality by ensuring
Equal opportunity
Avoid political capture
Appropriate tax structure
14
THANK YOU
THANK YOU
azman@symphonylife.my
azman@symphonylife.my
15

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