[ccebook.cn]The World in 2010

Business
Coming out of the dark
Nov 13th 2009
There is light at the end of the tunnel, and it is not an oncoming train
Reuters
Business will be easier in 2010, though that is not saying much. Companies have suffered a long and ferocious
beating. Many have expired. But the tougher ones will emerge leaner and stronger, and ready to seize the
opportunities that a gradual recovery will offer.
America was the first to stumble, and it will be among the first to pick itself up. After a painful bout of costcutting
and job-shedding, executives in the United States are confident that business will soon start to
recover, according to a survey by McKinsey, a consultancy. Asians are optimistic, too, especially in China.
Firms in the euro zone are the gloomiest. The global recovery will not be quick, however. There is still a risk
of a double-dip recession. And it is clear that business will not be the same after the crisis as it was before.
Firms will be warier of leverage. Those that borrowed too much will suffer and possibly die. Those with
stronger balance-sheets will gobble up their rivals or seduce their customers. Entrepreneurial firms will
displace market leaders, as they have in past downturns. And firms will boost their profits the old-fashioned
way: by becoming more productive.
The trend towards bigger government and more regulation will continue, especially in America, where public
spending as a share of GDP is growing fast. The United States government will still prop up and meddle in the
financial sector, stabilising the system but also cramping innovation. Federal fingers will remain on the
steering wheel in Detroit. And government will become the biggest customer for many industries. More
companies will open offices in Washington, DC, to be close to the action.
The United States Congress will institute a cap-and-trade system for curbing carbon emissions, thus making it
more likely that China and India will follow suit. But the toughest curbs will be pushed several years into the
future. So energy prices will rise only slowly at first. But American firms will anticipate future price increases
and scramble to adapt. Energy consumers will strive for greater efficiency. Producers of wind, solar and other
alternative sources of power will invest heavily. Subsidies may spur the construction of new nuclear plants.
Engineering, information-technology and consulting firms, such as GE, IBM and Accenture, will work hard to
develop smart electricity grids at home and elsewhere.
Health-care reform in America will have both domestic and global consequences. The government will make
sure that more Americans are insured, and it will regulate private insurance more tightly. To restrain costs, it
will squeeze not only hospitals but also drug firms and suppliers of medical devices. The returns from
innovation in medical technology will decrease, affecting inventive firms throughout the world that rely on the
American market to recoup their research costs. Public funding for research will only partly compensate for
this.
Consumption patterns will change in 2010. America will remain the biggest economy
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