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A WORLD TRAPPED INTO DEBT AUGUR SCENARIO 1

AUGUR stakeholder’s workshop, 17-18 November 2011. A WORLD TRAPPED INTO DEBT AUGUR SCENARIO 1. Terry McKinley and Giovanni Cozzi Centre for Development Policy and Research (CDPR) School of Oriental and African Studies (SOAS) University of London.

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A WORLD TRAPPED INTO DEBT AUGUR SCENARIO 1

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  1. AUGUR stakeholder’s workshop, 17-18 November 2011 A WORLD TRAPPED INTO DEBTAUGUR SCENARIO 1 Terry McKinley and Giovanni Cozzi Centre for Development Policy and Research (CDPR) School of Oriental and African Studies (SOAS) University of London DG Research and Innovation, CDMA building, 21 rue Champ de Mars, Brussels AUGUR

  2. AUGUR stakeholder’s workshop, 17-18 November 2011 SCENARIO 1 ASSUMPTIONS • Continued Fiscal Consolidation in developed countries: • Budget Deficits limited to -3% of GDP in European blocs • Debt stock reduced also in other developed countries (such as to 60% of GDP in the US) • Government Revenue is allowed to decline in Europe, US and Other Developed Countries • Revenue/GDP drops to 15% in the US & 20% in most European Blocs • There is a consequent drop of private investment in Central and North Europe and reduced intra-Europe migration • Multinationals tend to move Industrial Production and Exports to other regions, such as South America and India AUGUR

  3. AUGUR stakeholder’s workshop, 17-18 November 2011 SCENARIO 1 BACKGROUND ASSUMPTIONS • The pervasive influence of Global Markets continues to increase • National and International Governments have a declining influence over economic and financial developments • Global Investors and Corporate Management determine the availability of finance and the distribution of economic growth • Any improvements in the Environment are driven mainly by slow growth in developed countries and continued high oil prices • There is no concerted effort to achieve Greater Inclusiveness of Economic Growth, regionally (within Europe) or globally • Developing Countries continue to grow at a faster rate than Developed Countries—although some, such as China, slow down AUGUR

  4. AUGUR stakeholder’s workshop, 17-18 November 2011 107% 74% GOVERNMENT DEBT (% of GDP) 150% 61% AUGUR

  5. AUGUR stakeholder’s workshop, 17-18 November 2011 91% 66% GOVERNMENT DEBT (% of GDP) 125% 62% AUGUR

  6. AUGUR stakeholder’s workshop, 17-18 November 2011 -1.7% GOVERNMENT EXPENDITURE VERSUS INCOME (% OF GDP) -2.1% -3.0% -1.5% AUGUR

  7. AUGUR stakeholder’s workshop, 17-18 November 2011 CURRENT ACCOUNT (% OF GDP) AUGUR

  8. AUGUR stakeholder’s workshop, 17-18 November 2011 REAL GDP GROWTH (% p.a.) AUGUR

  9. AUGUR stakeholder’s workshop, 17-18 November 2011 REAL GDP GROWTH (% p.a.) AUGUR

  10. AUGUR stakeholder’s workshop, 17-18 November 2011 REAL GDP GROWTH (% p.a.) AUGUR

  11. AUGUR stakeholder’s workshop, 17-18 November 2011 54% EMPLOYMENT RATE (% OF WORKING AGE POPULATION) 69% 56% 69% AUGUR

  12. AUGUR stakeholder’s workshop, 17-18 November 2011 WORKING AGE POPULATION (% OF TOTAL POPULATION) AUGUR

  13. AUGUR stakeholder’s workshop, 17-18 November 2011 ELDERLY POPULATION (% OF TOTAL POPULATION) AUGUR

  14. AUGUR stakeholder’s workshop, 17-18 November 2011 NET MIGRATION (MILLION) AUGUR

  15. AUGUR stakeholder’s workshop, 17-18 November 2011 REDUCTIONS IN GOVERNMENT EXPENDITURES • While the elderly dependency ratio is rising, government expenditures are falling: what is the impact? • We use a composite index, the Government Service Standard, to gauge the impact of expenditure cuts on dependants • Government expenditures are compared to a weighted population index (for the elderly, children and the working-age population) • Then this ratio of public expenditures per population index is compared to general income per capita • The Results for Europe: There is a declining trend across the various blocs AUGUR

  16. AUGUR stakeholder’s workshop, 17-18 November 2011 GOVERNMENT SERVICE STANDARD (%) AUGUR

  17. AUGUR stakeholder’s workshop, 17-18 November 2011 • Conflicting Effects on Energy Use and Carbon Emissions: • Slow Growth in Developed Countries but Faster Growth in Developing Countries (along with a rising share of Global GDP) • A High and Rising Price of Oil both slows growth and energy use ENERGY USE AND CARBON EMISSIONS AUGUR

  18. AUGUR stakeholder’s workshop, 17-18 November 2011 WITHIN EUROPE INCOME PER CAPITA EUROPE AND OTHER BLOCS AUGUR

  19. AUGUR stakeholder’s workshop, 17-18 November 2011 CONCLUDING REMARKS • The results of this scenario are not promising: • Growth is slow and debt reduction unimpressive in Developed Countries • Employment is reduced and Government income and services decline • Developing Countries maintain more rapid growth rates, as global investment shifts towards them • But energy intensity and emissions do not decline globally • In terms of income per capita, East Asia gains on Developed Countries but South Asia and Africa lag far behind, leaving pronounced global inequalities unresolved AUGUR

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