JIM O'NEILL'S FINAL PRESENTATION: Goldman Guru Presents His View Of The World Form Now Through 2020

Jim O'Neill Presentation

“I have chosen to focus on the world,” said Jim O’Neill in his final note as an economist for Goldmans Sachs.

O’Neill, who is famous for coining the acronym BRICs, discusses how the BRICs and other growth markets will continue to be an increasingly important driver of global growth.

“If China grows by 7.5% in this decade, and if the developed world returns close to trend, then the world will grow by around 4%,” he said.

And in this environment, O’Neill argues that the stock market is a great place to be invested.

“Current ERP (equity risk premium) levels continue to indicate that equity markets are still quite attractive in many parts of the world,” he said.

O’Neill provides forecasts for all of the major economies in both the developed and developing worlds.

Thanks to Jim O’Neill and Goldman Sachs Asset Management for giving us permission to feature this presentation.

'he size of our populations alone does not drive economic growth, but it is a necessity to become big.'

'Canada, Australia, Spain, South Korea, the Netherlands, Saudi Arabia and Switzerland... are in this list and not the first one.'

'Only three of the most populated countries – the US, Japan and Germany – are currently in the top wealthiest.'

'The aggregate contribution to nominal GDP in the 2001-2010 decade of the 'Growth 8' (the four BRIC nations along with the four so-called MIST that each represent at least 1% of global GDP) was bigger than the aggregate of the G7 in 2010 US-Dollar terms.'

'In the current decade, 2011-2020, their aggregate contribution will be close to three times that of the G7. The BRIC nations alone will contribute more than double that of the G7, and the aggregate of the N11 will contribute more than the US.'

'If China grows by 7.5% in this decade, and if the developed world returns close to trend, then the world will grow by around 4%.'

This show 'China and India's possible huge share of global GDP by 2050 along with each emerging nation whose GDP may represent more than 1% of the world.'

Dramatic trade shifts are occuring in the developed markets.

Dramatic trade shifts are occuring in the BRICs as well.

Germany has experienced big shifts in its export markets.

Here's a closer look at German trade projections.

The US has also seen its mix of trade partners shift in recent years.

'We took this from the latest United Nations Statistics Division 2013 report and it suggests that trade between the so-called 'south south' countries is already approaching that between the so-called 'north north'.'

This 'shows the GS Growth Environment Scores (GES), an index used to measure sustainable growth or perhaps a measure of productivity.'

Here's a breakdown of the 18 variables that go into the GES score.

'Perhaps now things have shifted in such a way that the US is in a position to benefit more than many realise from this changing world.'

'In terms of the US balance of payments, page 18 shows that while far from strong, this changing world is contributing to an improvement in the current account and the broad balance of payments (BBoP).'

The Japanese yen has further to fall before reaching fair value.

China's balance of payments and current account balance are basically doing the opposite of what they are doing in the US.

This 'is my regular guide to the relative performance of consumer spending compared to industrial production and is especially important while reasonably encouraging.'

Leading indicators point to lower growth rates than what we've recently seen.

'Current ERP (equity risk premium) levels continue to indicate that equity markets are still quite attractive in many parts of the world.'

Not everyone is so optimistic about stocks...

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