The countries set to benefit from the globalisation reset

You can listen to the podcast by clicking the play button above. You can watch most recordings of the podcast on Schroders Youtube channel . You can also subscribe, download, rate and review the Investor Download via Podbean , Apple Podcasts , Spotify , Google and other podcast players. New shows are available every Thursday from 5pm UK time. You can read the full transcript of the podcast below: [00:00:07.930] – David Brett Welcome to the Investor Download the podcast about the themes driving markets and the economy now and in the future. I’m your host David Brett. At the turn of the millennium, the global economy was soaring, growing at 8% a year. It was good times for businesses and consumers. The catalyst was China opening up its economy and joining the World Trade Organisation, which marked a significant shift in the way multinational organisations worked and global trade operated. [00:00:47.490] – David Rees So we saw a long period, particularly after China joined the WTO, which really turbocharged this shift in manufacturing production located in Asia. [00:00:58.230] – David Brett That’s David Rees, Senior Emerging Markets Economist at Schroders. [00:01:02.600] – David Rees We’ve seen a shift from manufacturing in the west to China predominantly, but other emerging markets as well, where companies have been looking for cheap labour as a way to bring down the cost of production to widen their margins. [00:01:21.450] – David Brett However, the good times for now appear to be over. [00:01:26.570] – News clips International finances on the precipice. IMF chief Kristalina Georgieva says the global economy is on pace for the weakest growth since 1990. After three decades of mostly steady paced growth, global economic growth is now hitting a speed limit. On Wednesday, the World Bank released a new report that warns of global GDP growth shrinking to 2.2% annually between now and 2030. [00:01:51.520] – David Brett And for the first time in decades, the global economy is going through a significant reset. [00:01:57.790] – Andrew Rymer And in a nutshell we’re thinking about this is a rewiring of global manufacturing supply chain. [00:02:04.590] – David Brett That’s Andrew Rymer, Senior Strategist at Schroders. [00:02:08.340] – Andrew Rymer You might have heard the terms near shoring, onshoring, reshoring, reglobalization, slobilization. There are a range of terms out there. Ultimately what these are all referring to is some form of supply chain diversification or reorientation, one might say. [00:02:26.560] – David Brett So in this show, along with David and Andrew, we’ll be discussing the globalisation reset and in particular what it means in terms of which economies and which markets are set to benefit. But before that, we’ll discuss what’s driving the reset and the evidence for it. [00:02:44.710] – Announcer On Apple podcasts, Spotify, or wherever you get your podcasts. You’re listening to the Investor Download. [00:02:52.150] – David Brett Back in 1980, China looked markedly different to what it does today. The country was still recovering from the economic and social upheaval of the Cultural Revolution. Its economy was relatively insular, focused on agriculture and heavy industry, including mining and steel production. China’s gross domestic product at the time was around $305 billion, compared with $2.8 trillion for the US, according to the World Bank. But things were about to change. [00:03:26.850] – News clips The death of Mao Zedong in 1976 brought with it radical changes for the Chinese Communist Party and the nation. When Deng Xiaoping became a key player in China’s leadership in 1978, he embarked on a reform initiative aimed at opening up the economically and politically isolated People’s Republic of China. [00:03:48.830] – David Brett Under leadership of Deng Xiaoping, a series of economic reforms aimed at modernising China’s economy and integrating it into the global economy were introduced. Their effects would transform the fortunes of China’s economy and supercharge global economic growth. [00:04:08.340] – Andrew Rymer So if you think back to this period of globalisation companies at the time, the sort of driver of the globalisation was multinational companies looking to lower costs and become more efficient and that led them to shift production across border so into other geographies. So this was really that they were attracted to large pools of lower cost labour. [00:04:39.520] – David Brett The cost of manufacturing wages in China at the time was around forty cents per hour. Compare that with the average across the G seven of $17 per hour […]

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