Economic Forecasts for the Industrial World (or Not so Industrial Anymore)

Oct 26, 2010 - by Joel Lessem

Last week I attended a breakfast with Craig Alexander the Chief Economist – TD Bank.  It was a refreshing experience given all the noise and uncertainty coming out the media regarding the economy. Here are the broad strokes:

• Europe and North American are becoming a smaller part of the global economy
• As a percentage of Global GDP the “Industrialized World” has gone from c. 70% in 1990 to 50% today and that trend will continue as emerging markets will represent 70% of the world GDP by 2025 or so
• The “Industrial World” businesses will constantly have to improve productivity to compete

Alexander predicts that North America will face slow growth (approx. 2-3%) over the next 5-7 years.  Europe is in a significant bind.  Governments are supposed to save money in the good times and spend money in the bad economic times to stimulate the economy.  Unfortunately many of the EU nations spent money in the good times, and now that the economy has soured and their tax revenues have fallen off – they have nothing but huge debts, deficits and shrinking revenues – and rather than spend to save their economies they are faced with “austerity” measures.  Worse, there is little appetite for spending cuts from their electorate – in other words they are rioting and going on strike.  Unlike Toronto that just elected a Mayor on a platform of spending cuts – some European populations appear to believe money grows on trees and it’s not their collective problem.  As a result, Alexander believes a number of countries (Spain, Greece et al) could exit the EU and restructure (i.e. print lots of money to pay off their debts).

He also mentioned that Canada and other industrial nations will simply have to become more productive.  In other words, create efficiencies in the workplace.  This is where SaaS solutions, like Firmex virtual data rooms, that provide convenient access to intelligent information from anyplace at anytime, will have a huge impact on how we work and how much we produce.  I remember my first job in the early 1990s for Sarah Lee Corporation – filling out carbon paper inventory forms and couriering them to the regional sales manager.  Once a month I got a print out of store performance.  I operated in the dark.  Now I can sit in a Starbucks in Brazil and get a real-time dashboard of Firmex’s business performance and access any key corporate document from our virtual data room.  I can create and send to a proposal to a customer, which is auto-populated within our system, with “one click” of a button.  When we started the business, proposal writing was a job itself. We work so much faster, with real-time access to intelligent information, than ever before. Automation, informed and timely decision making and convenience will make a huge difference to productivity and ultimately survival in an increasingly competitive world economy.