Bloomberg Global Economic Index

Bloomberg Global Economic Index

Several companies send a variety of economic research data. I appreciate a broad view of what’s happening in the world even though we are in a period where many think nations can survive alone (note: check your history; hard to find a time that didn’t exist without international trade).

The Bloomberg New Economy Forum launched a first-of-its-kind index, covering 114 economies accounting for 98% of global GDP. The New Economy Drivers and Disrupters Report introduces a new benchmark that for the first time measures competitiveness against the new disruptive forces sweeping the global economy: automation, digitization, climate change, protectionism, and populism.

“In the New Economy, traditional ways of measuring competitiveness no longer tell the whole story. From protectionism to climate change, new disruptive forces are upending assumptions about how economies grow, and reshuffling the pattern of winners and losers. This report brings transparency to the obstacles economies face, showing who is positioned for success, and who is not,” said Tom Orlik, Chief Economist, Bloomberg Economics.

Bloomberg defines the New Economy as the shift in global economic power, from the traditional seats of power in Europe and North America to emerging economies spanning Asia, Africa, the Middle East and Latin America. The New Economy Drivers and Disrupters Report highlights the complex challenges that come with this shift in power, and concludes that the new economies are poorly positioned for the new disruptive forces. The ‘catch up’ process – which has defined the global economy for the last 50 years, with low-income economies narrowing the gap with high-income – isn’t over. It will become more complicated.

Key findings from the report include:

●       The next stage of China’s development will be harder than the last: On the traditional drivers of development, China outperforms most economies. With rapid modernization of infrastructure, advances in education, and investment in research and development, it’s the fourth ranked overall and the highest ranked emerging market. On the disruptive forces reshaping the world economy, from protectionism to climate change, it’s much less well positioned, ranking 50th.

●       In terms of economic opportunity, India today looks similar to China at the beginning of its boom: Favorable demographics and a far reaching reform agenda have the potential to super-charge growth. However, there is a barrier to rapid development – the country is even more exposed to disruptive forces than China, as it is ranked 80th. In an age of disruption, late developers will have a more difficult time in catching up.

●       Vietnam and Asia’s fourth wave: In Asia, exporting has been the path to prosperity. First Japan, then Korea, then China grew by leveraging their low labor costs to claim global market share. Vietnam has the potential to be part of the fourth wave of development. With a global tilt toward protectionism, however, the export path to prosperity is becoming more difficult to follow. Vietnam ranks 73rd on disrupters.

●       Loose BRICS: For more than a decade, the BRICS (Brazil, Russia, India, China and South Africa) have embodied hopes for emerging market economies. Bloomberg’s Index shows that, with the exception of China, they have yet to deliver on their potential. With work still left to do on optimizing traditional drivers of development, the BRICS will have additional difficulty managing the coming disruptive forces of the new economy.

●       Disrupting the Advanced Economies: For major advanced economies, the right policy response to disruptive forces will make the difference between extending prosperity and slumping growth. In the U.K., breaking ties with the world’s biggest trade zone could cost 7% of GDP over the next ten years. In the U.S., an immigrant-enhanced workforce and trade-boosted gains in productivity could support annual GDP growth at 2.7% in the next decade. Without them, growth could slump to 1.4%. Germany and Singapore showcase the capacity of high-income countries to manage disruptive forces. Singapore tops our rankings on the digital economy. Germany’s strong institutions and highly educated workforce provide a bulwark against risk.

About New Economy Drivers and Disruptors Report

The New Economy Drivers and Disrupters Report evaluates 114 economies on two sets of metrics. One captures the traditional drivers of development, while the other captures exposure to the disruptive forces creating new risks and opportunities in the new economy. The drivers consist of a composite gauge of productivity, projected growth in the labor force, the scale and quality of investment, and a measure of distance from the development frontier. The disrupters gauge economies’ positions in relation to populism, protectionism, automation, digitization and climate change.

The indices were developed by Tom Orlik, Scott Johnson, and Alex Tanzi of Bloomberg Economics, drawing on data from official, academic, and market sources. Michael Spence, Nobel laureate in economics, advised on the report.

The report includes a series of interactive data visualization graphics that show how economies are positioned relative to their peers, along with the rankings based on the drivers and disrupter metrics. Case studies include:

·        “A Rare Trade-War Winner, Vietnam Struggles to Keep its Gains”

·        “Chinese Micro Loans Open Window for Small Firms – And More Debt”

·        “Climate Change Leaves Zambia Struggling to Keep the Lights On”

·        “Poland’s Struggle to Find Workers Leaves Businesses in a Bind”

A series of subsequent case studies will launch weekly leading up to the New Economy Forum.

The New Economy Drivers and Disrupters Report is a proprietary report created by Bloomberg Economics for the New Economy Forum. The forum, co-hosted by Bloomberg and the China Center for International Economic Exchanges is being held in Beijing on November 20-22, 2019, bringing together the world’s most influential business leaders and government officials from more than 60 countries to drive public-private partnerships and action. New economy leaders will convene in China to address the forces of disruption challenging the new economy and catalyze solutions that impact change.

Manufacturers Bracing for Slower Growth Environment

Just in from PwC–results of its latest manufacturers survey. And it sort of fits with this week’s stock market news–not all that optimistic right now.

Sentiment regarding the direction of the domestic economy moderated further among U.S. industrial manufacturers, according to the Q4 2015 Manufacturing Barometer, released by PwC US today. A number of factors ranging from concerns about the global economy, particularly China, to the impact of the strong dollar and weak energy prices, have prompted manufacturers to reign in growth forecasts, while taking a more measured approach to hiring and capital spending outlays.

During the fourth quarter of 2015, optimism regarding the direction of the domestic economy over the next 12 months dropped to 46 percent from the prior quarter’s 60 percent, and 22 points below a year ago (68 percent). This represented the lowest level of optimism since 37 percent was recorded in the third quarter of 2012. Looking at the world stage, only 27 percent of industrial manufacturers expressed optimism regarding the global economy over the next 12 months, 11 points below a year ago (38 percent).

As a result of the decreased economic sentiment, the projected average revenue growth rate over the next 12 months among panelists declined to 3.6 percent, representing a significant deceleration from the prior quarter’s 5.3 percent. The benchmark represented the lowest revenue growth rate since three percent was recorded in the first quarter of 2011. Despite the lower rate, 70 percent of panelists still expect positive revenue growth for their own companies in the year ahead, with the majority (65 percent) forecasting single-digit growth.

“Sentiment among U.S. industrial manufacturers decelerated in the fourth quarter, primarily reflecting the uncertain outlook for the global environment,” said Bobby Bono, PwC’s U.S. industrial manufacturing leader. “The overall economic picture has become more complex as management teams navigate slower growth in China, coupled with a stronger dollar and weak energy prices. Nearly one-third of annual revenue among survey panelists is derived internationally, reflecting the significant exposure of domestic industrial manufacturers to the world economy. Turning more cautious, they are prudently dialing back on the overall level of capital spending and hiring as they prepare to transition to a more challenging business climate. However, a healthy majority still anticipate revenue growth, albeit at a more moderate pace, in the year ahead.”

Barriers to Growth and Challenges

Looking at perceived barriers to growth, monetary exchange rate has become the leading headwind over the next 12 months, up 11 points sequentially to 49 percent in the fourth quarter. A year ago, it was 15 percent, 34 points lower. Other barriers included lack of demand (39 percent), oil/energy prices (32 percent), decreasing profitability (29 percent) and legislative/regulatory pressure (22 percent). In addition, competition from foreign markets rose to 22 percent, up 10 points from the previous quarter.

PwC also surveyed respondents on the most prominent challenges in preparing for the year ahead. At the top of the list was the condition of the world economy, which was cited by 80 percent of respondents, while 67 percent rated it as a top-three issue. This was significantly higher than the last time this special survey was conducted in 2011. At that time, only 64 percent cited the condition of the world economy and only 18 percent listed this challenge among the top-three. Conversely, 71 percent of panelists flagged higher costs of goods and services as a major challenge, down from 92 percent in 2011. Additional major challenges cited by panelists included greater opportunities for new product and service introductions (67 percent), increased price flexibility (62 percent) and strength of the US dollar (53 percent).


As a result of the pullback in growth forecasts, manufacturers have continued to take a more conservative approach to hiring. In total, 42 percent plan to add employees to their workforce over the next 12 months, up from the low of 37 percent in the third-quarter of 2015, but down from 60 percent reported a year ago. The total net workforce growth projection was flat this quarter, below last year’s 1.1 percent, indicating continued cutbacks in hiring among these manufacturing firms.

Among the 42 percent of panelists planning to hire within the next 12 months, the most sought-after employees will be blue collar/skilled labor (29 percent) and professionals/technicians (27 percent). Among professionals/technicians, hiring of technology/engineering employees led the way, while hiring in the blue collar category was split between skilled/specialized workers and semi-skilled workers.

“Industrial manufacturers are continuing to seek avenues to improve productivity, while favoring professionals with strong technical skills,” Bono added. “In a slower growth environment, management teams appreciate the benefits of staying lean while ensuring they have the right talent to harness continued advances in engineering, technology and supply chain management.”


The tempered global outlook has also served to moderate the total level of capital spending plans among U.S. industrial manufacturers. They are continuing to spend, but they are spending less. Overall, 49 percent plan major new investments of capital during the next 12 months, up from the prior quarter’s 37 percent, and above last year’s 43 percent. However, the mean investment as a percentage of total sales dropped to 1.9 percent, sharply down from last quarter’s 5.6 percent and the 3.3 percent a year ago.

Conversely, 86 percent of respondents plan to increase operational spending over the next 12 months, up four points from both the previous quarter and the comparable period last year. Leading categories were new product or service introductions (44 percent), research and development (41 percent), business acquisitions (34 percent) and information technology (36 percent). “Given the prospects for a less robust economic climate, management teams continue to focus on investing in what they do best, while fostering innovation in an effort to strengthen their competitive positions,” Bono added.

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