Global Megatrends

Marisa Drew

Global Summit of Women

May 2011

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Introduction

Megatrend "Multipolar World“

Megatrend "Sustainability"

Woman’s Role in Facing the 21st

Century Megatrend Challenges

Response: Innovation

Megatrend "Demographics"

Agenda

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What is a megatrend?

A major and lasting alteration of society

Progressive change lasting several decades or centuries

The source can often be rooted in a major technological breakthrough, a geopolitical rebalancing, or demographic or environmental shift

Slide 4 / 40

Multipolar world

Slide 5 / 40

From a bi-polar world…

1981

Slide 6 / 40

... to a multi-polar world

1981

1990s | G7

Slide 7 / 40

... to a multi-polar world

2009 | G201990s | G7

1981

Slide 8 / 40

Multipolar world

–

The

world

economy

1980, share of world GDP

Emerging MarketsDeveloped Markets

44%56%

Source: IMF, Credit Suisse

Slide 9 / 40

Multipolar world

–

The

world

economy

1980 // 2030, share of world GDP

Emerging MarketsDeveloped Markets

63%37%

Source: IMF, Credit Suisse

Slide 10 / 40

Top 10 | GDP ranking

in USD (IMF est)

2009: 11th

2009: 12th

2009: 9th

Slide 11 / 40

Average GDP growth 2009 to 2014

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Advancedeconomies

Central andEastern Europe

LatinAmerica Emergingeconomies

Developing Asia Commonwealthof Independent

StatesSource: IMF estimates

GDP growth

Slide 12 / 40

0% 20% 40% 60% 80% 100%

Population

Land mass

Foreign exchange reserves

Energy consumption

GDP at PPP

Exports

GDP at market rates

Market cap (full market)

Market cap (float adjusted)

Emerging Markets Developed markets

Emerging economies as % of world total

Emerging markets accounts for:

–

More than 80 % of world’s population

–

Around three quarters of the land mass

–

Around 50 % of exports

However, the economic performance amount only to one-third of global GDP

Emerging Markets –

too big to ignore

Economic output of emerging economies tripled over the last 10 years and there is much more to come.

The IMF expects emerging markets to grow by another 50 % in the coming 5 years.

Source: Bloomberg, Credit Suisse / IDC, 2010

Global importance & economic strengths: EM are likely to thrive & grow in the future

Slide 13 / 40

Going forward, over the next five years, emerging market economies are poised to outpace the developed market growth by around four percentage points*, driven by strong fundamentals, such as:

–

Demographic dividend

–

Growing middle class

–

Under-penetrated consumer market

–

Low credit penetration

–

Low labour costs and high productivity growth

–

Resource richness with control of majority of resources

–

Solid balance sheets with low and growth supportive debt/GDP ratios

–

Significant need for infrastructure build-up

Fundamentals of Emerging Markets remain robust

*source: International Monetary Fund (IMF)

Slide 14 / 40

Consumption shifts to emerging markets

Source: IMF, CEIC, Credit Suisse

An expected strong economic growth, increasing wages, and higher per capita income, growth generators in emerging markets are likely to shift from exports and investments to consumption.

As this happens, poverty rates typically decrease and purchasing power rises.

This will lead to a massive expansion of the global middle class, possibly becoming the main driver for consumption in this decade.

Slide 15 / 40

Rapidly growing middle class in China

Source: McKinsey, UN

Annualincome

300 mn

0

20

40

60

80

100

20152005 20251985 1995Poor Global affluent Lower middle class Upper middle class Mass affluent

< 25,000 RMB(< 3662 USD)

25,000 –

40,000 RMB(3662 -

5859 USD)40,000 –

100,000 RMB(5859 -

14648 USD)100,000 –

200,000 RMB(14648 -

29295 USD)> 200,000 RMB(> 29295 USD)

300 mln

Slide 16 / 40

Emerging

brands: Shifts to innovations and brand building

Emerging

brands

With the trend towards a multipolar world and the rise of the emerging market consumer, we now see the emergence of new global brands that have their origins in emerging markets.

The main advantages of emerging brands compared to developed market brands are their lower cost structures, a “fresher” image and national pride.

Source:

BrandZ

Slide 17 / 40

Frontier markets

What

are Frontier

Markets

Frontier markets are smaller, less developed emerging markets. These economies tend to be at an earlier stage of development than established emerging markets like China or India. In this sense, we consider them to be the next generation of emerging markets.

The investment case

The premise of the frontier markets investment case is that, with time, frontier markets will graduate to emerging or even developed market status.

Today’s frontier markets from Nigeria to Sri Lanka have similar growth prospects, given their large and growing populations, technological catch-up potential, large output gaps and consumer markets that are still in their infancy.

Slide 18 / 40

Sustainability

Slide 19 / 40

Per Capita Consumption Known Raw Material Reserves (rhs)

Sustainability

1975 20101950

in current USD

Years50

25

30000

10000

Source: Bloomberg, Credit Suisse

Slide 20 / 40

OilOil

Oil Oil

Oil

Oil

Oil

1000 AD 1800 1950 20101 AD

Population:

2.5x

Population Growth

Pre

ssur

e on

Res

ourc

es

Energy:

+600% since 1950

Increased consumption and demand

Sustainability

Source: IEA, UN, Credit Suisse

Slide 21 / 40

0

20

40

60

80

100

120

140

Jan 90 Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10

Oil Price

Oil Price

15

30

Source: Factset, Credit Suisse

USD/barrel

Oil moved out of the USD 15 –

30 Band

Last data point: 02.05.2011

Slide 22 / 40

Water

Water losses from urban water networks as % of water supply

> 60% of world

population will be

affected by water

scarcity by 2025

according to a UN

study

> 50% of fresh water

reserves are polluted

Source: UN0 5 10 15 20 25 30 35 40 45 50

Bulgaria

Slovenia

Hungary

Ireland

Czech Rep.

France

Italy

Slovak Rep.

UK

Finland

Denmark

Germany

Slide 23 / 40

Demographics

Slide 24 / 40

Demographics

1800 | 1bn // 1930 | 2bn

Source: UN, Credit Suisse

Slide 25 / 40

Demographics

1800 | 1bn // 1930 | 2bn // 1975 | 4bn

Source: UN, Credit Suisse

Slide 26 / 40

Demographics

1800 | 1bn // 1930 | 2bn // 1975 | 4bn // 2025 | 8bn

Source: UN, Credit Suisse

Slide 27 / 40

The demographic transition

Source: Ronald Lee (2003): «

The Demographic Transition: Three Centuries of Population Change

»

JEP 2003

years at birth in billions

Life expectancy (in years) Population growth (in billions)

0

10

20

30

40

50

60

70

80

90

1700 1800 1900 1950 2000 2050 21000

1

2

3

4

5

6

7

8

9

10

Slide 28 / 40

Source: OECD, Credit Suisse / IDC

5

10

15

20

25

30

35

40

0-16 years 17-45 years 46-65 years 66+ years

EM EU 12

%

Population age

distribution: EM

vs. EU

Slide 29 / 40

Family & children8.0%

Unemployment6.1%

Sickness, health care &

disability36.5%

Old-age & survivors45.9%

Other3.5%

By 2045 the number of 60+ people globally will exceed those under 15

In most EU countries, old-age and survivors benefits make up the largest item of social protection expenditure

–

In Italy, nearly 60.7% of total benefits were devoted to old-age & survivors benefits

Real Health expenditure grew by 70% more than real GDP growth over the 1970-2002 period in most developed countries

Social benefits as a % of total benefits, EU-27, 2005

Source: ECP, Eurostat, Hagist

and Kotlikoff

(2005)

Demographics

& health

expenditure

Slide 30 / 40

According to the United Nations the urban population in the developing world will grow at close to one million people per week

in the next 25 years

...or at an equivalent to the population of Los Angeles per month

...or at an equivalent to the population of France per year

Urbanisation

in developing regions

The urban life style is much more resource intensive: commuting,

water infrastructure, electricity, waste

Slide 31 / 40

Limited Resources

The Megatrends triangle

More consumers

Higher per capita consumption

Slide 32 / 40

Slide 33 / 40

Innovation is fundamental to come up with solutions for the world‘s future needs and challenges.

Today‘s pace of technology diffusion coupled with the convergence of technologies is a powerful lineup for future economic growth.

Innovation

Slide 35 / 40

Challenges create innovation

Wind Farm, Nevada

Solar Panels on facade

ThyssenKrupp Building in Duisburg (Germany)

Sky Sails, reduction of emission between 10 and 35%

Slide 36 / 40

… and the motivation to action change

Cleaning polluted water reserves Build up desalination plants

Estimated global annual expenditure on Water Infrastructure (in USD bn)

Improve water distribution infrastructure

Source: OECD

In 2008, China allocated $220bn of its $586bn stimulus package to green projects

Slide 37 / 40

Robotics

The

main

drivers

for

the

use

of robots

are

safety, precision, reliability

and the

substitution

of labor

by

capital. Robots

will become

more

important

in the

next

years.

Nanotechnology

While

still at an early

stage, nanotechnology

is

set

to become

a part

of our

daily

life and has the

potential to become

one

of the

most

important

technologies

of the

21st century.

Digital World / Social media

The

internet

is

possibly

the

most

important

innovation

in recent

decades

and although

already

well advanced, it

is

far from

being

fully

utilized. Social media one example of a “world changing“

use of internet.

Genetics/Biotechnology

As a result

of occurrence

of age and an unhealthy

life-style, new

diseases

will appear. The

demand

of advanced, successfull

medical

treatment

will increase.

Innovation

Slide 38 / 40

Women’s Role in facing 21st

Century Megatrend Challenges

Slide 39 / 40

Women’s role in facing the 21st century Megatrend challenges

Closing the gender gap between male and female employment rates could boost GDP in EM countries by 14% and in the US/UK by 9%

Women perform 66% of the world’s work, produce 50% of the food but earn 10% of the income and own 1% of the property

In 2006, women constituted 85% of the poorest 93 million clients of microfinance institutions

Women control 27% of global wealth today or roughly $20.2 trillion; this is expected to grow at a rate of 8% per year through 2014

Source: World Bank, UN, Credit Suisse

Slide 40 / 40

Women’s role in facing the 21st century Megatrend challenges

“Teach a man to fish, feed him for a lifetime. Teach a woman to fish, she’ll teach her friends, start a business and pretty soon an entire village is on the mend”

–

Hilary Clinton (adapted)

“It is natural that affluence should be followed by influence”–

Augustus William Hare, 1827

“And who knows? Somewhere out there in this audience may even be someone who will one day follow in my footsteps and preside over the white house as the President’s spouse. I wish him well”

– Barbara Bush

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