Forward Thinking

February 2017: A recovery in trade 

Each month Oxford Economics’ team of 160 economists updates its baseline forecast for 200 countries using the Global Economic Model, the only fully integrated economic forecasting framework of its kind. Below is a summary of our analysis on the latest economic developments, and headline forecasts.

The IBM Institute for Business Value engaged Oxford Economics to survey Indian executives, including about 600 startup entrepreneurs, 100 venture capitalists, 100 government leaders, 500 leaders of established companies, and 22 leaders in higher education.

Oxford Economics worked with IBM's Institute for Business Value in  mid-2016 to field a survey among 1,502 C-suite executives in a range of roles around the world. As the cognitive era dawns, outperformers in the industry are rethinking insurance by applying technologies that understand, reason, learn and interact to improve the way insurers do business.

Oxford Economics were appointed by the Gatwick Growth Board (GGB) to provide an independent assessment of Gatwick Airport's local, regional and national impact. The GGB was established in 2016 to examine the economic and social consequences of Gatwick Airport’s future plans for growth and expansion.

The US-China Business Council commissioned Oxford Economics to assess the overall impact of the trade and economic relationship with China on the US economy. The study shows that today, the US-China trade relationship actually supports roughly 2.6 million jobs in the United States and, as the Chinese middle class continues its rapid expansion over the next decade, US companies face significant opportunities to tap into a new and lucrative customer base that can further boost employment and economic growth. 

Top ten calls for 2017 — Trumpenomics leads the way

Our top ten calls for 2017 are, not surprisingly, dominated by the impact of Donald Trump’s surprise election victory in November. The full effect of reflationary policies under the new Trump administration is unlikely to be seen in the real economy until 2018 with world GDP growth and trade growth remaining moderate next year. Nevertheless, we do expect US growth to firm in 2017 and US financial market developments – to some extent anticipating the likely fiscal policy and growth effects of Trump’s policies – will have a major impact on the global economic landscape. 

The global economic outlook has shifted markedly in the three months since our last report. While our baseline forecast has changed only modestly, upside risks to growth have increased significantly and we no longer judge risks to be skewed to the downside. As highlighted in the latest Oxford Economics Global Risk Survey, the greatest source of risk is the US policy stance once President-elect Trump takes office.

The economic landscape is changing, with the world’s urban centre continuing to shift Eastwards. Aggregate GDP of Chinese cities covered in the report will overtake the largest cities in Europe and North America by 2017 and 2022 respectively. Nine additional Chinese cities will join the world’s top 100 ranked by real GDP in 2030, with 13 cities from North America and Europe dropping out. Despite this shift, the top five largest city economies in 2030 will remain unchanged from today.

Innovation and rapid adjustments to changing customers and markets lies at the heart of today’s competitive world. All companies are being pulled toward the center of a “Digital Vortex,” which is characterized by exponential change and the blurring of industry lines. Companies must adapt, or their odds of being displaced—or even put out of business altogether—markedly increase.

In considering the risk that London may shed financial services jobs as a result of Brexit, we do need to consider whether any alternative EU city has the capacity to absorb the jobs that London loses.

The North American Metro Service provides historical data, forecasts, and written analysis of all 50 states and Washington DC, and 89 Metropolitan Statistical Areas that make up the majority of US economic activity. We will shortly expand the coverage to include additional coverage of 500 counties to provide a more granular view of US economic prospects.

If the most iconic American job ever is riding the range as a cowboy, then rolling down the highway as a long-haul trucker is somewhere on the short list. Now, 159 years after a patent was issued for the technology (barbed wire) that would end mass employment for the cowpoke, technology in the form of self-driving vehicles is threatening to reduce the role of the truck driver—one of the most common occupations in the country.

We expect significant changes in the world economic order over the next decade and a half. Not surprisingly, Chinese cities will be at the forefront of these changes. The aggregate GDP of China’s 150 largest cities is forecast to double from around US$10 trillion today to US$20 trillion in 2030 (measured in 2012 prices and exchange rates). This means that Chinese cities will account for almost half of the increase in global city GDP and will represent a third of total urban GDP by 2030. By contrast, the combined output of the 58 North American cities covered in our analysis will rise by US$4.0 trillion, followed by non-Chinese Asian cities (US$3.5 trillion) and then European cities (US$3.2 trillion).