1. Le prospettive dell'economia mondiale ed europea
Emilio Rossi
Senior Advisor
June 2014 1 1 1

2. Main developments affecting Italian economy
Global activity strengthening
Recovery in the US, Eurozone improving - risk of deflation?
Japan – is “Abenomics” working?
China – will there be a crisis?
Could the ‘troubled bunch’ Emerging Markets derail recovery? 2 2

3. AE improving, EM slowing but still faster growth
Source: Oxford Economics 3 3 3 3

4. Major risks dissipating, average risks increasing

5. AE - Recent trends make us more optimistic
Left: D/iis_chart/forecast\overforecastcharts.xls manufacturing production!
Right: Z:\Projects\AMT\PPT\Quarterly update\Apr14\Charts_ xlsx
Updated May 16, 2014 5 5 5

6. US & JP - Aggressive monetary policy
Central Bank Total Assets
% of 2008 GDP
Source; IMF, World Economic Outlook, April 2014 6

7. US faster deleveraging helped consumption
Household Debt-to-Income Ratio %
Source; IMF, World Economic Outlook, April 2014 7

8. US manufacturing now very competitive
Global&US.ppt
Linked: D:\NewChart\World\Forecast\WorldForecastCharts.xls Tab: Unit Labour Costs (6) – extend to latest quarter 8 8 8

9. US – 3% growth from 2015

10. Abenomics boosting inflation10

11. Japan - Consumption tax lifted GDP in Q1…11

12. …but domestic demand needs more support...12

13. …GDP growth will struggle to stay above 1%13

14. We expect QE to be extended into 2015
Source: Oxford Economics 14

15. China - Forecast is for smooth rebalancing…
L i n k e d t o D : \ N e w C h a r t \ C o u n t r i e s \ C h i n a \ F o r e c a s t \ C h i n a F o r e c a s t C h a r t s . x l s E x p e n d i t u r e S t r u c t u r e
G r o w t h s l o w s t o j u s t o v e r % o v e r t h e m e d i u m t e r m a s t h e f a c e p a s t o f c o n s u m p t i o n m a k e s u p f o r s o m e o f t h e s l o w i n g i n i n v e s t m e n t g r o w t h
T h i s i s s t i l l a v e r y s i g n i f i c a n t s l o w d o w n f r o m g r o w t h r a t e s o v e r % i n t h e l a s t d e c a d e
P M I a n d o t h e r d a t a s u p p o r t s t h i s i n t h e s h o r t - t e r m w i t h a s l o w i n g i n i n d u s t r i a l p r o d u c t i o n b u t r e t a i l s a l e s r o b u s t
A m o d e r a t e r e f o r m a g e n d a i s i m p l e m e n t e d i n c l u d i n g l i b e r a l i s i n g d e p o s i t r a t e s i n H u k o u r e f o r m h e l p s t o s u p p o r t r i s i n g l i v i n g s t a n d a r d s
E a s i n g i n c r e d i t g r o w t h l e a d s t o g e a r i n g r a t i o s s t a b i l i s i n g c l o s e t o c u r r e n t l e v e l s
D : \ D A T A \ P M I \ P M I _ d a t a _ c h a r t s . x l s , t a b s M a n u f a c t u r i n g B R I C s a n d M a n u f a c t u r i n g U S , E Z , J A P , U K
U p d a t e d / / 1 4
China - Forecast is for smooth rebalancing… 15 15

16. Non-financial corporate debt worrying
But over the forecast set to slow in line with nominal GDP
D:\NewChart\Countries\China\Core\outstanding debt statistics 16 16

17. How deleverage and reduce shadow banking...
17 17
D:\NewChart\Countries\China\Core\outstanding debt statistics
How deleverage and reduce shadow banking... 17

18. …without killing off investment?18 18

19. EMs affected by weak China and US tapering
Updated chart needed 19 19 19

20. …as well as by commodity prices
Updated chart needed 20 20 20

21. Underlying vulnerabilities still exist...21

22. ...and need to reform is essential for many EMs...22

23. … but widespread crisis unlikely
23 23
E:\oefcom\On-Line Services\CountrySpecific\Emerging\Macro\SecureArea\emweekly\Charts\Oct13 charts
… but widespread crisis unlikely 23

24. Eurozone recovery is gradually strengthening
Linked to D:\DATA\PMI\PMI_Data_Charts.xls tab EZ chart
Updated May 16, 2014 24 24 24

25. Orders and capacity suggest turning point…
Both charts: Z:\Industry team resources\Charts\GlobalIndustryOverviewCharts 2003 format.xlsx Tab: chart16
Updated May 16, 2014
In Europe, capital goods orders have been on a clear upward path in recent months, reflecting stronger business sentiment and pent-up demand after nearly two years of industrial recession. 25

26. ...but unemployment a Eurozone issue (ex-GY)
Source: Oxford Economics

27. EZ - Access to credit still decreasing
Nonfinancial Firm and Household Credit Growth
Annual % change
Source; IMF, World Economic Outlook, April 2014 27

28. EZ – competitiveness hindered by ULC

29. Low inflation nearing deflation risk

30. Forecast overview 30
Source: Oxford Economics 30

31. Conclusions Global activity strengthening advanced economies improving
EMs disappointing amid capital outflows
Euro break-up and fiscal cliff out of the agenda, but risks still twisted on the downside
Recovery in the US, Eurozone improving - but risk of deflation
Japan - “Abenomics” making progress, third arrow missing
China – GDP growth slowing, proposed reforms may avert a severe crisis but risk of plummeting investment and banking crisis 31 31