[ccebook.cn]The World in 2010

y far. But over-stretched American consumers will no longer drive global growth as
strongly. Firms bent on expansion will increasingly look towards emerging markets
such as China, India and Brazil. Chinese productivity growth actually accelerated
between 2008 and 2009, to a startling 9%. Russia will seem less inviting, despite its
hydrocarbon wealth, because of fears about the rule of law.
Copyright © 2009 The Economist Newspaper and The Economist Group. All rights reserved.
More companies
will open offices
in Washington, to
be close to the
action
Most consumers will still be short of cash, so firms that make cheap stuff well will thrive. Luxury-goods firms
will flounder. Purveyors of basic necessities, such as Wal-Mart and Procter & Gamble, will do well. People don’t
stop brushing their teeth just because there is a recession, notes John Quelch of Harvard Business School.
Asian firms that make cheap cars and washing machines for Asia’s emerging middle class, such as Tata,
Hyundai and Haier, will make inroads into Western markets.
Innovation, which slowed only slightly during the recession, will accelerate again. Firms that continued to
invest in research during bad times, such as Google, Intel and Toyota, will reap rewards. America will remain
the world’s biggest innovator, but many Asian firms will draw closer. Manufacturers will sell more goods
directly to consumers over the internet, bypassing traditional retailers. Data-intensive businesses will move
more of their computing into the cloud. Social-media firms such as Facebook and Twitter will attract millions of
new users but reap only slender revenues. Nanotechnology and genome research will yield fresh marvels.
The trade spats of 2009 will not, with luck, escalate into a full-blown trade war, but protectionist sentiment
will rise. Governments that co-operated effectively to contain the financial crisis will have to co-operate again
to keep trade flowing. Much will also depend on China’s continued willingness to lend money to a stillprofligate
Uncle Sam.
President Barack Obama wants to raise taxes to ease America’s budget deficit, but he has promised to soak
only the rich. He will wait until after the mid-term elections in November 2010 to break this promise. If
American growth stays slow, the public debt burden will become unsustainable and inflation will revive.
Public distrust of business will remain high. To allay it, firms will have to become more transparent. And they
will have to adapt to a world where big changes happen quickly. Bad publicity travels at the speed of light. A
big scandal can destroy a firm in an instant. The collapse of one financial enterprise can threaten the whole
system. Governments cannot stop every foundering company from going under; nor should they. So firms will
need sharp reflexes in 2010, tempered by caution.
Robert Guest: Washington correspondent, The Economist
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