A Two-Speed World Is Emerging From the Wreckage of the Great Recession, as Companies in China, Brazil, and India Prepare to Accelerate Out of the Downturn More Quickly Than Their Western Rivals, Says BCG
A Study by The Boston Consulting Group Shows That Business Life Is About to Become Harder, Not Easier -- Executives Will Have to Engage in a Dogfight for Growth in the New Era of Growth "Haves" and "Have-Nots"
| Source: The Boston Consulting Group
BOSTON, MA--(Marketwire - January 6, 2010) - The world's rapidly developing economies are
poised to live up to their name in the aftermath of the Great Recession and
to reduce the wealth gap between themselves and their great rivals in the
West, according to new analysis by The Boston Consulting Group (BCG),
released today.
From 2010 to 2015, if economies follow the historical pattern of
postrecession growth charted by the International Monetary Fund, the
long-term annual growth rates in the United States, Europe, and Japan could
fall below 2 percent.
By contrast, it is likely that growth rates in China, India, and Brazil
will return to levels closer to those seen before the crisis: for China, 8
to 9 percent; for India, 6 to 7 percent; and for Brazil, 3 to 4 percent. Of
the BRIC countries, only Russia is at risk of seeing growth rates as low as
2 to 3 percent, far below precrisis levels.
This study, highlighting the fast emergence of a two-speed world, was
produced in conjunction with the forthcoming book "Accelerating Out of the
Great Recession: Winning in a Slow-Growth Economy" (McGraw-Hill, February
2010) by BCG senior partners David Rhodes and Daniel Stelter.
"The implication of our projections for the global economy is this:
Business leaders need to prepare for a two-speed world," said Stelter.
"Many developing countries appear to have dodged the economic bullet, at
least for now. This should force companies in the West to realize -- if
they haven't already done so -- that they are going to be in a dogfight for
growth over the next five to ten years."
Added Rhodes, "The postcrisis era will be marked by the growth 'haves' and
'have-nots.' Companies need to understand this and to proactively develop
business models that enable them to make the most of growth where it
exists."
BCG's Simulation of Growth Through 2015 Shows the Emergence of a Two-Speed
World
According to the International Monetary Fund, economies tend to have a
significant "output gap" -- the deviation of actual output from its
extrapolated precrisis trend growth -- in the seven years after a banking
crisis. On average, actual output is 10 percent below its precrisis trend
(an output gap of -10 percent).
Building on the IMF's findings, BCG has created a model to explore the
effects of the Great Recession on likely growth patterns. The model shows
that, in some countries, the output gap is likely to be significantly worse
than average.
In Russia, the BCG model projects an output gap in 2015 of -29.7 percent;
in the United Kingdom, -16.7 percent; in the United States, -12.8 percent;
and in Germany, -11.7 percent. By contrast, Brazil is projected to be ahead
of its precrisis growth trend, with an output gap of 1.3 percent. For India,
the output gap is expected to be -2.5 percent; and for China, -4.3 percent.
To learn more about the study or the book, or to arrange an interview with
one of the authors, please contact Eric Gregoire at +1 617 850 3783 or
gregoire.eric@bcg.com.
About the Authors
David Rhodes is a senior partner and managing director at The Boston
Consulting Group and the global leader of the firm's Financial Institutions
practice. Since joining BCG in 1985, he has worked primarily on projects
involving major strategy and organizational change in large financial
institutions, working with clients in Europe, Asia-Pacific, the Middle East,
and the United States.
Daniel Stelter is a senior partner and managing director at The Boston
Consulting Group and the global leader of the firm's Corporate Development
practice. He is also a member of BCG's Executive Committee. During his 19
years with BCG, he has participated in and directed many projects
throughout Europe with a focus on corporate finance (including M&A, IPOs,
due diligence, strategic alliances, and joint ventures) and strategy
(including portfolio strategy and value management).
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm
and the world's leading advisor on business strategy. We partner with
clients in all sectors and regions to identify their highest-value
opportunities, address their most critical challenges, and transform their
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of companies and markets with close collaboration at all levels of the
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competitive advantage, build more capable organizations, and secure lasting
results. Founded in 1963, BCG is a private company with 68 offices in 39
countries. For more information, please visit www.bcg.com.