The 2020 Mid-Year Economic Update_long

A European Economist’s Perspective on the Global Economy


Dr. Daniel Thorniley,
senior global consultant of the Economist Corporate Network in Vienna, Austria,
presented Global Business Outlook” at the recent target=’_blank”‘>European
Power Transmission Distributors Association
annual meeting in Austria.
Thorniley is a senior consultant to about 250 corporations including Dow,
Dupont, Glaxo SmithKline, Henkel and SKF. Some of the more interesting
observations gleaned by MDM Editor Lindsay Young:



  • The price of
    oil has fallen, and now stands about twice the price of a couple years ago. Oil
    on average will be $65/barrel in the next two years.
  • Commodity
    prices will not fall, but will rise from 1-5 percent over the next two to three
    years.
  • Global
    interest rates will stay high, meaning your financing costs will stay
    high.
  • The U.S.
    dollar, though weakening, will likely stay strong for at least the next two
    years.
  • The U.S.
    economy is trending downward, with about 3.2 percent growth this year, and 2.4
    percent next year. Global GDP growth will stay flat for the next two
    years.
  • On China:
    “China is a great market, a very big market you must be there. However, many
    of my clients say the shine is coming off China, and expectations are not being
    met.” This is due to distribution and marketing challenges. It is a good market,
    but perhaps not as good as people may think. Moving product is a challenge.
    There is less just-in-time delivery for European and U.S. markets and transport
    costs hurt profits. In addition, there are high levels of red tape, insider
    competition and corruption. Still, sales growth is 15-30 percent across sectors,
    but with slim profit margins.
  • On Central Europe:
    “Central Europe could be, should be and ought to be a new part of the world that
    Western distributors are looking at.” Many manufacturers are not satisfied with
    local distribution channels, but many Western distributors have been slow to get
    into that market. Distributors should follow their suppliers
    there.

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