On Friday, March 11, 2011 at 2:46 pm, a 9.2 earthquake struck off the coast of Japan. This lead to a chain reaction of events leading to a tsunami, and a nuclear disaster as one of Japan’s power stations leaked radiation. What are the global effects of these three disasters?
1. Higher Energy PricesEnergy prices are soaring because of the fear that the current unrest in the Middle East is affecting the global supply of oil.The disaster in the Fukusima power station highlights the need for Japan to now import traditional energy sources to replace any energy produced through its nuclear facilities- which will add to more demand for natural gas, and oil.
2. Infrastructural Renewal ProjectsBoth the earthquake and the tsunami have badly damaged much of Japan’s infrastructure. Obviously a rebuilding phase would mean a government with a high debt problem, would have to invest in the reconstruction of those areas affected by this triple disaster. This could become the responsibility of the corporate sector, who dominate Japan’s economy.
3. Banking and Insurance LossesWhether Insurance companies pay out billions of dollars of claims due to the the earthquake and tsunami, remains to be seen, but the “man-made” nuclear disaster could become their liability.Japan’s global banking and insurance industries may be forced to reinvest at home, depleting any global investments outside the nation.
4. Change of Government?Before these three disasters, ordinary Japanese had lost their confidence in another scandal hit government. How the government reaction to these three disasters, and the subsequent rebuilding process, could change the public perceptions of their leaders- but in the long term, we could see more changes inside the top echelon of the Japanese government.
5. Environmental PerceptionsAfter the nuclear disaster in Fukusima, many people are questioning the wisdom of building nuclear energy plants in a quake zone. Depending on the radiation levels, and the area contaminated, a worldwide reaction to the use of nuclear energy could result in the ending of the Obama nuclear energy program in the USA, and even France’s ambitious energy program.
6. Money Markets Japan remains the worlds third largest economy, but also like the United States, one of its biggest debtors. The value of the yen could fall, as banks spend on reconstruction projects, whilst the Government may be forced to raise taxes to pay for them. Some large Japanese corporations may cancel or put on hold overseas projects, re-investing these funds in rebuilding the areas affected by the earthquake.
7. Asian-Pacific GrowthChina has the money and the economy in this region, but Japan is a second player in economic terms. Japanese companies invest in much of South East and North Asia, whilst the government often sponsor education & training programs in the region. Japan’s contributions in the area, could shrink, leading to some fears of reduced growth.
The natural disasters of the earthquake and tsunami, have led to the man made nuclear disaster, and destruction of part of a high tech nation.. Japanese are resilient, inventive and industrious people, and should overcome the hurdles of reconstruction. However this does have a short term effect on the global economy, and a long term effect on the future of the nuclear power industry.
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From a geographic point of view, Singapore is a tiny little country in the Asia-Pacific region. To be precise, it is situated off the southern tip of the Malay Peninsula. With a total square kilometer area of only about 710 km, it is clearly one of the smallest countries in the region. But from pure economics point of view, this tiny little country cannot by any imagination be called “small”. In fact, many business or international trade analysts would call Singapore “The Real Asian Giant”.With one of the best developed economy which is market driven and growing at a tremendous pace, Singapore is the preferred destination for international investors and entrepreneurs. It is the fourth largest foreign exchange trading center in the world and more importantly, has been ranked as the best place to do business year after year by several world business reports of excellent repute.
The more significant report of late has been the “Doing Business 2010 Report” by the World Bank which rates Singapore as the easiest place to conduct business while being the most competitive as well in Asia.In fact, one of the important factors that place Singapore ahead of the other main Asian giants such as China or India is the business friendly policies of the Government. Foreign entrepreneurs who are based in Singapore and incorporate a Singapore company is treated the same as a local entrepreneur. With 100% foreign ownership allowed in a Singapore based company, foreign owned companies can be registered within one or two working days and can avail of all the business and tax incentives on offer by the Government if the company is managed from Singapore.Singapore company registration can also be completed by foreign entrepreneurs even if they do not visit the country and also if they wish to operate the business from their current country of residence.
The other aspect which makes registering a company in Singapore simple, straight-forward and more importantly risk-free, is the absence of any kind of corruption, red tape or bureaucracy in the company registration process. As a matter of fact, this is where Singapore scores big over other economies in the entire continent. Foreign companies usually complain how difficult or frustrating it can get when dealing with Government bodies in many countries around the world. But Singapore offers such an efficient and streamlined system, that there is no corruption or unnecessary blockage to incorporating and operating a business from the country.Investors often feel that Singapore is a risk-free country for their investments and it is better to manage operations in the entire region from Singapore. This is the reason why the country has seen an enormous rise in registrations of company headquarters for the entire Asia-Pacific region.While Singapore’s boundaries will always make it a small country, Singapore’s economic achievements has made it an Asian giant and a force to reckon with. It is the prime example of how good vision and proper execution can make a difference to any country’s future.
Singapore is not just a small city-state but the most preferred destination for foreign entrepreneurs as well as investors who are looking for the best in infrastructure, business policies, growth potential and of course the best return on investment.
The brightness of the glittering Twin Towers of Malaysia, the one time tallest buildings of the world is telling many success stories of Malaysia and how it has been transformed into one of the Asia’s wealthiest nations.The serene beauty of the sky-high towers with a celestial background of shining stars in a clear dark night in the far distance, propelled my thoughts back into the good old Malaysia where, while Dr. Mahathir Mohamad was criticising the western capitalism, how cleverly he applied the open economic strategies which made Malaysia to trade all over the world and its entrepreneurs to become international players.Dr. Mahathir’s open economic strategy with a clear vision and a mission triggered my memories back into my effort “Strategic Post-Conflict Economic Development Initiative” as an awareness program to transform into Sri Lanka’s war-ravaged economy into one of the South Asia’s best.
Dr. Mahathir’s strategies are well reflected in his macro – economic strategies by adopting the open economic policies with the realization in mind that the world trend of Globalization and Liberalization is irreversible. We are living in an era of Globalization & Liberalization, a deeply imbedded neo-classical economic thought and its applications everywhere in the globe.This overwhelming tide of G&L is reinforced and accelerated by the wide spread of Boeing and Airbus jets, Information Technology and the better and efficient shipping facilities which made the entire world into much smaller and less distant than ever.The current Prime Minister of Singapore Lee Hsien Loong once said far back in the late nineties when he was the deputy Prime Minister, “It is better to embrace globalization and liberalization proactively, at our own pace, than face the prospect of one day being swept away by the floodwaters of competition.”
His realization of embracing the globalization and liberalization might have been inherited into him by the strategies of former Prime Minister of Singapore Lee Kuan Yew who in his long tenure, changed Singapore from a sleepy colonial outpost to a prosperous high-tech enclave and applied better open economic policies to make use of the Globalization and Liberalization in Singapore’s favour.Now Singapore’s per capita GNP is higher than that of its erstwhile colonizer, Great Britain. It has the world’s busiest port and is the third-largest oil refiner and a major center for global manufacturing and service industries. And this move from poverty to plenty has taken place within one generation.
In 1965 Singapore ranked economically with Chile, Argentina and Mexico but today its per capita GNP is four or five times of theirs.Lee Kuan Yew managed this miraculous transformation in Singapore’s economy while maintaining tight political control over the country. Malaysia and Singapore better managed their economies in Southeast Asia than any other countries in facing the new trends of Globalization and Liberalization.Dr. Mahathir’s strategies have eventually made Malaysia into a Southeast Asian economic superpower with number of megastar Malaysian entrepreneurs.Tan Sri Ananthakrishnan, who owns the Twin Towers of Malaysia and several other conglomerates is a role model for many Malaysian entrepreneurs who have given real meaning to the present day Malaysia by transforming Malaysia into one of the Asia’s wealthiest nations. Tan Sri Anantha krishnan, a Jaffna origin Malaysian who had a humble beginning as a smalltime bookmaker in Australia and later as a polished dealmaker with a degree from Harvard Business School, became a sophisticated oil trader with connections to many of the Asia’s political and petroleum industry elite with interests in oil and gas fields in the United States.
Tan Sri Anandakrishnan later went further into orbit, with the successful launching of MEASAT – 1, the Malaysia’s maiden telecommunication satellite. Tan Sri Ananda krishnan’s success provides a compelling testimony to Dr. Mahathir’s economic policies and their successful implementations.Though, today, Dr Mahathir stepped down from power, Malaysia boasts a diversified and modern economy, which weathered the Asian financial crisis in1997-98 better than many of its peers. Malaysia’s success has been by diversifying away from the export of palm oil and rubber to the assembly of electronics with the steady provision of political stability by the resolved ethnic divisions by Dr. Mahathir.Dr. Mahathir’s keen stewardship of the economy has spawned in various projects and the latest was the Multimedia Super Corridor – a “knowledge-based economy master plan” to upgrade the Malaysia’s electronics industry into a hi-tech application industry. The knowledge-based economy master plan which encourages the new trend of Business and Knowledge Process Outsourcing is a new dimension of Globalization.Southeast Asia first experienced a new and different wave of Globalization from Japan by the transferring their locations to more labour – intensive and resource – intensive Asian countries so that Japan could continue to form the international cooperation. By this Japanese initiative of Global – localization most of the Asian countries are generally favourable towards the Globalization trend. The born-again WTO from the old GATT is permanently positioned to look after the liberalization.The trend of Globalization and Liberalization is indisputably irreversible.
Therefore, it is really a great challenge to developing countries. Singapore and Malaysia are successful in tackling the Globalization and Liberalization because they were well – prepared.These Southeast Asian tiger economies, all went through series of distinctive stages of economic transformation with certain common characteristics.Lee Kwan Yew and Dr. Mahathir Mohammed had clear long term visions and strong political leadership skills how to make use of the globalization in their countries’ favour. In Malaysia and Singapore there are strong and efficient technocrats who have the ability to chart the vision into planning with the capability to get things done in a much effective way.The value system which they have reinvented over a short span of time after the independence produced many successful women entrepreneurs in Malaysia and Singapore.
Malaysia and Singapore successfully defined the paths for the emergence of indigenous entrepreneurs by encouraging small and medium size enterprises.They overcome the problems of relatively shallow and weak entrepreneurial group in Malaysia and Singapore compared with well equipped and well experienced thick and abundant entrepreneurial group in developed countries.They altered their countries’ entrepreneurial strength for an equal match of the game if confronted each other directly and instantly. They looked after the private sector until they can stand alone to compete against international challenges to become themselves multi-nationals. They realized well in advance the strength and competence of the private sector which is the main market player in determining a country’s eventual competitiveness.
Though Malaysia and Singapore had constraints, they realized the importance of Government Leadership in the very beginning itself. Their governments identified and developed the countries’ long-term competitiveness. They have given meaning to the leadership which can contain not only vision, imagination and direction but also commitment, dedication and thorough follow-up.They have given real meaning to the ability to translate political leaders’ visions into realizable planning and policies and made eventually their countries as the richest nations of Asia and beyond.
Economic Development in Asia shows high impact of economic development of this respective continent. Readers and viewers must take note that the economy of Asia is an integral part of the world’s economy.This continent have adopted one of the following economic systems such as capitalism, communism, socialism, and facism.Asia is the largest continent in terms of area and population. It is also the region with the highest growth rate.Here are Asian countries that contributes their economic development to our society.Of all the Asian Countries, Japan is the only Asian country included among the indsutrialized countries.Taiwan, Hongkong, and Singapore are known as “Little Japan” which considered as Newly Industrialized countries.
India as of now contributes business process outsourcing improvement for the information technology sector which results to a great impact in economic development of South Asia.Philippines is now improving because they contribute foreign remittance that they send money to their love ones which came from Overseas Filipino Workers that improves their nation.In China, history and culture is their secret to improve their economy even if it is ruled and operated by state.
Brunei Darrusalam contributes oil export and that is how they preserved and rich in natural resources for their country.North Korea shows hammer and sling as a symbol for their communistic views of their economic system in Far East Asia. While South Korea shows modern technology that is influence from Western countries which results an improvement of technology in their designated countries.Indonesia is the largest population of Muslim nation in the whole Asia which is colonized by Netherlands. It is based on their banking and finance in an Islamic Way of living. This is the same situation in Malaysia which is a British colony.
After showing the information of some Asian Countries, they have also problems that they are facing in economic development for Asian countries in which I discovered and these are the following:First, they have low standard of livingSecond, they have low level of productionThird, there is a rapid population growthFourth there is a high rate of unemploymentFifth, there is over dependence on agricultural production and exportation of raw materialsand sixth which is the last the dependence on international trade.Asian nations are destined to play a greater role in the world’s economy in the very near future.The moral lesson of this article is very important because awareness of what these problems are will contribute to a better understanding of these problems and open mindedness in meeting the challenges and economic opportunities available to Asians as a people.
In the new century, the international situation has continued to undergo profound and complicated change. World multi polarization and economic globalization are progressing amid twists and turns. Science and technology are advancing with each passing day. We have before us both development opportunities that we must seize and grave challenges that we must deal with seriously. Despite the widespread conflicts and clashes of interests and increasing numbers of factors of uncertainty and instability in the world today, peace and development remain the overriding themes of the times.
The world needs peace, countries desire for development and people want cooperation. This has become an irresistible trend history.At present, Asia, on the whole, enjoys stability, with peace, development and cooperation, becoming the mainstream of an advancing Asia. With concerted efforts, relevant Asian countries have freed themselves from the shadow of the financial crisis, overcome the impact of the SARS and the Bird Flu, succeeded in economic restructuring, quickened the tempo of industrial upgrading and transformation, promoted and robust regional cooperation, and increased the capacity to tide over potential risks.Asia has retained its position as one of the world’s most dynamic regions.
We are full of confidence with Asia’s development in future. In 2009, the two triggers of Asian economic growth are its exports and regional consumption. And the internal consumption has never make a halt without any influence from the government stimulus policy. Though the differences in economic growth rate and the driving factors of different nations in Asian have persisted, Asian economy is with good prospect. As the recovery speed of Asia through this global economic crisis, Asia has been leading the way in the global economic recovery. Even though the worsened crisis may bring hard times to Asian economy, Asian countries have enough power to handle the problems that will occur. Asia has maintained a good momentum at the first half year of 2010 regardless of tensions in the global market.
“The era of good feelings associated with the heyday of globalization has gone forever,” say top economists. I will agree and believe this is an entirely good thing that will enable our shattered world to recover from a devastating global recession. Often times we mix up what feels good at the time with what is the right course of action over the long term. The great recession has taken its last breath but has taught us a great many valuable lessons during its pre-destiny and ultimate reign. The main lesson being that open competition is good. Once we start regulating how much we can achieve we start sabotaging our own continued growth and prosperity. Linking a global currency to a global government would have been a catastrophe. I’m glad that the wise and learned have taken this lesson out of the tragedies of the past 3 years.Recovery will continue to be slow around the world, but we are in a state of recovery nonetheless. The biggest difference from days past will be which countries will lead the charge to mending our torn financial fabric. In this edition be prepared for some surprise trends and projections unlike many are foreseeing. I caution you however as you digest this information that you may think I’m totally off my rocker on some of my predictions, but recall, I was almost entirely correct about last year’s winners and losers. I will begin evaluating several countries and then streamline my analysis with industries to watch.
Happy New Year and good health in 2011.
CONDITION OF THE US
US academics are projecting a 3.4% growth in the US this year. I will disagree. My mark for US growth in 2011 will top off at 1.5% but we are most likely to experience a 0.9% growth by year’s end December 31st 2011. The US is riding high after strong 2010 end of year retail figures rose by 3.1% over 2009 but it is overlooking that the expectation was at 3.4% and November figures were a full 2.1% higher than December. The trend should have been reversed to justify complete optimism in a stronger growth pattern. Economic growth and sales will also continue to weaken as inventory cycles top out.Meanwhile, households and banks are still fixing their balance sheets and will keep a wary eye on credit expansion further crippling any long-term sustained growth above 1.5%. Banks will loosen credit by the third quarter of 2012.Further, the dark cloud of unemployment still looms heavy over the United States horizon. Consequently, corporate gains should peak in the first quarter and then level off as high unemployment and consumer confidence subside and take their toll on the momentum of profit increases by businesses. Indeed the unemployment rate in the US fell in December; however the 103,000 jobs that were created last month are well short of the 200,000 per month figure needed to sustain stronger growth and lasting improvements to an economic condition. Our average pace for job creation last year was 94,000 per month. Moreover, 8.4 million jobs were shed over the span of the last 3 years, but only 1.1 million were added in the private sector. Government expansion does not contribute to an economic recovery, neither has it done so historically nor will it do so in the future.Though in fact, the government has itself cut 20,000 jobs last month. At December’s employment pace, it will take until 2016 to make up for the jobs lost and finally establish a balance in the marketplace. As of today, 6.76 million Americans have stopped looking for work and in a recent survey say they will not look until the middle of next year.
With those not receiving unemployment and those who have forgone the application thereof altogether our real national unemployment figure is closer to 10.8% as opposed to the public figure of 9.4%. Though, recovery in the US will be faster than 2016, I anticipate tolerable levels of employment by the end of 2012. However, we expect a 5.8% decrease in average salaries from $50,303 to $47,382 by this time.
CLASH WITH CHINA
Continued conflicts with China will further hinder US economic expansion. In addition to the gap between political ideologies the following factors will heighten the tensions between the two nations. First, the rise of China is becoming increasingly associated with job losses for ordinary Americans and a rising threat to American power. Second, China’s currency policy which is aimed at keeping the Yuan undervalued against the dollar will further aggravate trade relations between the two nations and protectionist legislation in the US will rise sharply. The move to make the Yuan (renminbi) a global currency for international trade has already begun. It has launched trading of it in the US. Third, the Chinese military buildup in the Pacific has gotten the US business population and governing bodies on edge and up in arms. The J-20, a new Chinese stealth fighter has just debuted on the global stage. In response the US will step up military exercises in the region opening the doors to economic policies as the weapon of choice. Additionally, China’s continued reluctance to tighten the squeeze on Iran while instead pursuing their own energy strategies will further harm relations with the US.
China’s economy will see an 8.4% growth in GDP but look for hostilities between the Communist party and the rising tide of young intellectuals from within who disagree with the current order. The US will be blamed for this movement. China will engineer a slowdown in the Asian markets.ASIAUzbekistan will lead Asia in economic growth this year with an 8.5% increase, followed by China then India with a GDP of 8.2% and we will see inflation in India begin to fall back to normal levels from last year’s 10% to about 6.4%. Afghanistan holds a commanding fourth place in Asia with my prediction of a 7.2% growth this year, followed by Sri Lanka at 6.6%, Indonesia at 6%, and Kazakhstan at 5.5%. Australia will be a safe place to put money as it is expected to achieve a 2.6% growth this year.
MIDDLE-EAST AND AFRICA
This region’s predictions bear the most surprises of all. Ethiopia will carry the torch for the Mid-East and North Africa with a solid 10% GDP this year; it will be followed by Tanzania at 7.1%, Angola at 7%, Iraq with 6%; Lebanon with 5.8% despite the government collapse last week, and Syria with 4.6%. The Gulf States will remain solid hovering at an average 3% GDP, but the greatest gains will be made with the countries mentioned hereto.
EUROPEE
urope is a battered child that will require a great deal of rehabilitation for the next five years. It will demonstrate the least impressive gains next to North America but leading the pack will be Russia with a 4% GDP improvement over last year. Ukraine will be firmly on Russia’s heels with a 3.9% GDP, trailed by Turkey at 3.6%, Poland at 3.4%, Estonia with 3.2%, Latvia 3%, Lithuania with 2.9%. Greece will play the largest role in stifling the European economy as a whole with a negative growth of -3.5%, Portugal will play second anchor with a negative growth of -1%. Germany, the Netherlands, France and Switzerland will stay fast with a GDP figure lingering between a 1% to 1.6% growth pattern.
LATIN AMERICA
Chile will champion the greatest growth in the Latin American economies, though smaller in size then Brazil will outpace it by 1.2% growth reaching 5.7% by year’s end. Brazil will experience the second greatest growth with 4.5%, followed by Colombia at 4.4%, but tied with Paraguay and Peru for second place. Colombia will grow at the same pace as Uruguay.Mexico will expand its economy by 3.5% by the middle of the year but will soften in response to slower US growth to 3% by December 31st.Overall global GDP growth will be a strong and promising 4%, while World trade growth will exceed 6% to 6.3%. We can attribute this to the rise in trade with emerging markets including India, North Africa, the Middle East, Eastern Europe and segments of Latin America.
INDUSTRY STRENGTH Banking
Western banks will continue to shed jobs amid tightened fiscal policies in these territories while China and Hong Kong are expected to boost their workforces in three quarters of their banks. Lending will remain slow with a net overall increase in lending of 1.3% in the US.
Industry Strength – WeakReal-estate
The worst may be over for this sector but recovery to pre 2006 levels is still a good 3 years away. Commercial rents will fall across all categories in the US with industrial being the worst hit and retail sites the least hit. In some parts of Europe commercial property prices will fall another 15% and housing prices in the US will slip another 7%.
Industry Strength – WeakTravel and Tourism
The travel industry will experience a 5% rise in international tourist travel, France will see the largest gain in visitors. Leisure travel is still expected to bounce back faster than business travel as I expect business travel rates will take at least another 3 years before returning to pre-2008 levels. Revenue per available room in the US will climb by at least 6.7% this year taking a commanding position ahead of any other country.
Industry Strength – GoodHealth Care
Global health care spending as a share of GDP will increase to 9.9% though the US is expected to outlay nearly 16.2% of its GDP far outpacing the rest of the world as health care costs rise due to sweeping legislation passed last year.Luxury
Spending on luxury items will increase by 4%.
Industry Strength – GoodFood and Farming
Expect overall food prices to increase by 5% this year due to supply disruptions and health department regulations. Wheat prices will increase by approximately 8%. Sugar prices will drop by 10%, and coffee prices will decline by 5%. Good news for coffee lovers.
Industry Strength – MildEntertainment
Television and movie enterprises will experience a 5% and 7% increase in demand this year respectively while music and digital music outlets will expand by a mere.5%. Actors are more likely to find work in 2011 than musicians.
Industry Strength – MildInformation Technology
Far and wide, IT is the most stable industry to enter into in 2011. Hardware purchases will slow to 7% from 10% but will remain strong for the duration of the year. Software services will increase by 4% while spending on IT will increase to 4.6% for a total industry capitalization of $2 trillion.
Industry Strength – StrongCONCLUSION
I’ve made some bold and perhaps at times controversial predictions above. This coming year will not be without its challenges, as with all years. In some instances over the course of 2011 some of us may experience anxieties about the uncertainties we will undoubtedly face as we try to make sense of all the “expert” predictions for the future. But we must remember that as leaders it is imperative that we listen to and consider all opinions, while remaining true to ourselves, our values, our beliefs and focusing on our business’ core strengths. It has become incumbent upon us that we continue to move forward with realistic expectations until the tea leaves change and the dust from this calamitous crisis finally settles. As I embarked upon bringing all this information together for you it was my hope that I could at least present a practical foundation to stand upon as we spy out into the ever-changing world and scan the horizons for an indicator of what’s to come.
War will break out in 2011, there is no question, but it will not be a war fought with conventional weapons or nuclear missiles. It will be a war of ideologies that will test the constitution of the greatest countries on the planet. It will test the resolve of every individual seeking to gain a fundamental understanding and clarity of what is to become of our world. The answer is not to dig our heels down into the ground and wait for another storm to come. The answer is to venture out into the unknown and siphon as much knowledge as we can from the resources around us to make an educated, realistic and commonsensical decision that will finally set the wheels of the global community right.
None of us that has ever achieved greatness has done so while waiting on the porch for someone to come and tell them the coast is clear. For I venture to say that the coast will be whatever we make of it, it is after all our coast. But before we can make any decision, we must be armed with knowledge, information, patience and a firm resolve in order to succeed and weather any potential storms ahead.Wishing you a blessed New Year for 2011. Good luck in forging your roads.
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