1. The Future of the Global Economy Augusto López-Claros, Ph.D. International Environment Forum Brighton, United Kingdom December 18, 2010

2. 2 Global Economic Outlook Macroeconomic Outlook (% GDP Growth) 200920102011 World Output-0.64.84.2 Advanced Economies-3.22.72.2 US-2.62.62.3 Japan-5.22.81.5 Euro Area-4.11.71.5 Germany-4.73.32.0 France-2.51.6 Italy-5.01.0 Middle East and N. Africa2.04.15.1 Sub-Saharan Africa2.65.05.5 Western Hemisphere-1.84.0 Brazil-0.27.54.1 Mexico-6.55.03.9 China9.110.59.6 India5.79.78.4 Russia-7.94.04.3

3. 3 Rising Public Debt Public Debt (in % of GDP)

4. 4 United States Public Debt (in % of GDP)

5. 5 U.S. Deficits: Largest in History U.S. Fiscal Deficit: 1980-2010 (% of GDP) Source: IMF World Economic Outlook

6. 6 Advanced economies’ gross financing needs, 2010 (In percent of GDP) Maturing debtDeficit Gross financing needsGross debt* Average maturity** Australia2.0-5.07.015.54.8 Belgium20.8-5.125.997.35.4 Canada15.9-5.321.282.55.6 France16.9-8.225.177.46.5 Germany10.2-5.715.972.56.0 Greece13.4-8.121.5115.17.4 Ireland7.7-12.219.964.56.7 Italy21.2-5.226.4115.86.7 Japan54.2-9.864.0217.75.2 Portugal13.0-8.821.877.16.2 Spain10.3-10.420.755.26.7 Sweden6.8-3.310.140.96.0 United Kingdom8.6-11.420.068.212.8 United States21.2-11.032.283.24.4 Source: IMF, Fiscal Monitor 2010 * In 2009. ** In years.

7. 7 Projected Change of Elderly Projected shares of elderly in total population by region (in percent)

8. 8 Radically different growth experiences GDP per capita 1980-2009 (PPP in US $)

9. 9 Growth Experiences Average annual per capita income growth 1970s1980s1990s19702000 58 poorest countries 0.5-0.4-0.510096 Other developing countries 2.54.0 100280

10. 10 Sustainable Economic Welfare Index of Sustainable Economic Welfare: United States

11. 11 Sustainable Economic Welfare Gross National Product Minus Cost of commuting Cost of personal pollution control Cost of auto accidents Cost of water pollution Cost of air pollution Cost of noise pollution Loss of wetlands Loss of farmland Depletion of nonrenewable resources Long-term environmental damage … Equals Sustainable Economic Welfare

12. 12 Average GDP per capita in dollars Average income level High-income countries$37,787 Upper-middle-income countries $6,942 Lower-middle-income countries $2,286 Low income countries$567 Source: World Bank 2008 country classification, IMF, The Economist Democracy Index

13. 13 Decile shares of global income (2002, in %) DecilePercentage shares First0.61 Second0.94 Third1.25 Fourth1.62 Fifth2.19 Sixth3.13 Seventh4.99 Eight8.26 Nineth19.71 Tenth57.52 Total100 Top ventile31.34 Top to bottom decile ratio94.6 Source: Branko Milanovic, World Bank

14. 14 Extreme poverty: 2005 Total1374 (21%) India456 Africa388 China208 Latin America45 Millions of people with income under $1.25/day 2005 Total2562 (39%) India828 Africa557 China447 Latin America91 Millions of people with income under $2/day World Population: 6600

15. 15 Poverty 19902005 Millions of people with income under $1.25/day 18191374 Millions of people with income under $2/day 27562562

16. 16 Evolution of Social Indicators 19602007 Infant mortality rate (per 1000 live births) 14044 Average life expectancy (years) 4366 Illiteracy rate (% of adults) 5318

17. 17 Implications of Population Growth Population Growth from 1800 to 2050 (billions) Energy consumption Burdens of scale of human / economic activity on environment Consequences ― Global warming ― Loss of tropical forests ― Bio-diversity loss

18. 18 A regulatory nightmare Doing Business Report: An international perspective on regulation ArgentinaBrazilMexicoVenezuelaIndiaChina New Zealand Ease of doing business*11312556174122832 Starting a business*1351271151421211511 Number of procedures151891613141 Time (days)321522814130401 Dealing with construction permits* 16710833961361762 Employing workers*1301211411808911114 Registering property*951118892105303 Time (days)5142744745292 Protecting investors*104703817038881 Paying taxes*13414514917716913212 Enforcing contracts*4510079711801811 Time (days)5906164155101420406216 Closing a business*83127231491406217 Time (years)2.841.84101.71.3 * Ranking sobre 181 países Fuente: Doing Business Report 2009

19. 19 Corruption vs. Regulation

20. 20

21. 21 Current Account Balances (in billions of US $) Country 20072010 United States-727-466 Spain-144-72 United Kingdom-75-50 Australia-58-30 Italy-52-58 France-26-46 China372270 Germany254200 Japan211167 Norway5569 Russia7770 Switzerland4450 Korea626 Saudi Arabia9329 Kuwait5035

22. 22 China: Current Account Balances

23. 23 Dollar to Euro exchange rate January 1999 to October 2010 Source: Board of Governors of the Federal Reserve

24. 24 Governance Gap Global problems requiring collective action  Management of global environment  Fight against poverty  Global financial architecture  Nuclear proliferation  Illegal drugs  Terrorism and conflict prevention  Trade liberalization and distribution of benefits  Education