‘Dull and Old’ Economies to See Strongest Growth Since 2010, Says IHS Chief Economist

  ‘Dull and Old’ Economies to See Strongest Growth Since 2010, Says IHSChief
  Economist

Emerging markets no longer primary locomotives of global economy; World growth
and competitiveness landscape once again changing

Business Wire

DAVOS, Switzerland -- January 20, 2014

‘Dull and old’ economies will have their strongest performing year since 2010
and will drive the global recovery in 2014, according to Chief Economist Dr.
Nariman Behravesh of IHS, Inc. (NYSE: IHS), the leading global source of
information and analytics.

Ahead of the 2014 World Economic Forum in Davos, Switzerland, Dr. Behravesh
commented: “According to IHS estimates, in 2014, emerging markets will
contribute the least amount to global growth since 2010. Economies considered
‘dull and old,’ like the U.S., U.K., Germany and Japan, will actually be
2014’s new locomotives of growth.”

“The keys to understanding the growth slump in the advanced economies, and the
nascent rebound, are the twin headwinds of private-sector deleveraging and
public-sector austerity,” said Dr. Behravesh. “Fortunately, these twin
headwinds are now easing.”

“Substantial progress has been made in reducing both public- and
private-sector debt, especially in the United States. American households and
banks have aggressively reduced debt levels, while the U.S. public-sector debt
has been stabilized. Europe, as well, has made progress on fiscal austerity,”
he said.

However, Dr. Behravesh cautioned that Europe’s story was not all good news,
noting that in Europe, private-sector leverage, especially in the banking
sector, remains at troublingly high levels.

“We are seeing rising labor costs in the emerging world, stagnant wages in the
developed world and low energy costs in North America. As a result, we will
likely see a re-balancing of global investment flows back into ‘dull and old’
economies,” he added.

Turn out the lights, the BRICS party is over

“There has been an alarming deceleration in the emerging world in the past
four years. This has little to do with the ‘taper panic’ that gripped
financial markets in the spring and summer of 2013. In actuality, the most
daunting challenges facing emerging markets are structural,” said Dr.
Behravesh.

“The 'BRICS party' of the 2000s was fueled by three global drivers: a credit
boom, a commodities 'super-cycle' propelled in large part by China’s
double-digit growth rates, and 'hyper-globalization' as multinational
corporations expanded global supply chains. All three of these drivers have
lost their steam, leaving many emerging markets high and dry,” he said.

“Without major microeconomic reforms that would open up labor and product
markets, reduce fiscal burdens, and lower unit labor costs via productivity
gains, a return to the ‘BRICS party’ of the 2000s is unlikely,” Behravesh
concluded.

About IHS (www.ihs.com)

IHS (NYSE: IHS) is the leading source of information, insight and analytics in
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and confidence. IHS has been in business since 1959 and became a publicly
traded company on the New York Stock Exchange in 2005. Headquartered in
Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth
and employs 8,000 people in 31 countries around the world.

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Contact:

IHS, Inc.
Amanda Russo
+44 75 57 23 19 08
Amanda.Russo@ihs.com
 
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