Issue 21 2012.pdf - New Zealand Corporate Traveller Magazine

HSBC, CHIEF ECONOMIST PAUL BLOXHAM
explains the world’s economic centre of gravity is
returning to the east.
This will not surprise most of us – at a superfi cial
level. We can all see the growth of Asia and
we can all postulate that China and India are
becoming superpowers, but to have the centre of
gravity shift permanently to Asia? Get used to it. It
is happening and has been for 30 years.
A long-term study by HSBC shows that China
and India – respectively the largest and second
largest economies in 1870 – will regain their high
rankings by 2050, with China at number one and
India at number three. And this signals massive
opportunity for the tourism industry – New
Zealand’s included.
Paul Bloxham, told a recent breakfast for selected
bank customers, at Auckland’s Langham Hotel,
that the world’s economic centre of gravity was
moving steadily and inexorably eastwards, from
mid-way between North America and Europe in
1980. It is now to the eastern edge of Europe and
heading into Asia.
This sustained, permanent, polar shift is being
exacerbated by the fi nancial crises in the west.
Europe may have edged back from the abyss,
Paul Bloxham says, but largely as a result of
European Central Bank intervention to become
lender of last resort to other banks. This has
brought stability of a sort but all-important
structural change is yet to be tackled. Not helping
is that the last quarter of 2011 shows Europe’s
economy, as whole, is now in recession.
Greece, Paul Bloxham says, is not going to be the
showstopper; what happens elsewhere in Europe,
after the write-down in Greece’s debt, could be.
All in all, even if Europe can keep heading in the
right direction, it’s going to take some years to
be certain that the oncoming light isn’t another
express train – which will exert a dampening
effect on Europe in the immediately foreseeable
future.
America’s recovery seems equally tenuous. For
example, employment fi gures may appear to be
heading north but this masks the “discouraged
labour force”: people who have simply withdrawn
from the labour market and are not showing up
in the stats.
Worldwide, real growth is currently coming from
the emerging economies: 5.3% growth, compared
with 0.6% in the developed world. New
Zealand’s recovery is good (ish). There has been
a structural shift away from a debt-driven to a
trade-driven economy. Commodity prices are
high and the economy will get a shot in the arm
from the Christchurch reconstruction – when it
gets going. At $30 billion it will represent about
15% of our economy.
This will have a similar effect to that for Australia
from new investment in mining. Advanced
projects in the mining investment pipeline in
Australia account for 15% of that economy.
That represents an unprecedented boom.
Nevertheless, Australia has a two paced economy
– mining and non-mining – with tourism being at
the weakest end of the non-mining sector.
world
TRADE
“RE ORIENTING” OF THE WORLD ECONOMY
By Dai Bindoff
Asia is leading growth internationally. Furthermore,
both China and India look set for a soft
landing this year, with China’s being the softer.
Both are successfully bleeding infl ation out of
their economies. China has made signifi cant
internal changes in emphasis and is in better
shape than it was in 2008/2009 and is looking
at 8.6% growth. Furthermore, it is also much less
dependent on Western economic stimulus. Not
so long ago, about one-third of the stimulus was
from external demand, today that fi gure is almost
nil; China’s economy is being driven almost
entirely by domestic demand.
Riding on the back of the general rise in Asian
wealth, is a matching growth in the Asian middle
classes with discretionary income and an
increasing taste for the fi ner things. These include
travel and tourism to places greatly different from
their own, that know how to look after people both
culturally and in terms of service and material
comfort (and where there are goods that don’t
have “Made in China” on them – because they
can get all they need of those, at home).
Furthermore, the exchange rate won’t necessarily
be the only factor with these people. They already
are, and will continue to be, seriously wealthy.
The urge to pay well to buy the best is very strong
and so, their decision to purchase may not be
driven by how inexpensive something is, but by
how expensive (and value for money, naturally).
Currently, around 500 million Asians fall into
this category; they will number 1.7 billion by
about 2020. And, New Zealand, they are on our
doorstep.
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