Stéphane Garelli

Keynote by Speaker Stéphane Garelli

A Crisis in Four Acts

• 2008 was the year when the financial crisis reached its paroxysm. 2009 was the year of the great recession. 2010 was characterized by an economic recovery which may be too weak to pay for the huge price incurred by the recent crisis. Budget deficits are exploding (-11% of GDP in the US, – 7.5% in Europe but – 14% in the UK). The level of debt has consequently exploded: it was 78% of the GDP for the G20 in 2007 – it has moved up to 106% in 2010. Such a debt burden is likely to weigh heavily on the vitality of economic activity and will reduce the margin of maneuver of advanced economies. In addition the volatility of currencies and commodity prices create a particularly volatile business environment in 2011. How to thrive in such a level of uncertainty?

Keynote by Speaker Stéphane Garelli

A desynchronized recovery

• Although the economic recovery is quite brisk in emerging economies such as China and India, most advanced economies are experiencing a less buoyant turn-of-fate. The expected U shape recession did not turn out exactly as expected since the economy is exiting from the crisis at a lower level of activity than it went in (hence an inverse J recession). The years 2001 – 2008 were exceptional in terms of growth, with a formidable expansion of exports. It is highly probable – and worrying – that some excess capacities may have been created during these years of exuberance. In 2011 the world economy will be highly desynchronized. Some nations will remain on the verge of recession, other will be overheating, some shall confront deflation, others inflation. In such an environment, companies will have to implement a very flexible and adaptive business model.

Keynote by Speaker Stéphane Garelli

A Saturated market in the advanced economies

• One of the reasons to fear a slower growth rate is that advanced economies are now “Replacement Economies” where each purchase generally replaces an existing product. For example, there are some one billion old mobile phones stored in drawers in the US. As a result, households – many of them plagued by debt – realize that they can wait longer before buying additional non essential goods without experiencing a fall in their standard of living. What will make them buy again? A dramatic innovation! New Technologies, more than ever, will be the name of the game.

Keynote by Speaker Stéphane Garelli

Globalisation 2.0

• In this context, competitiveness seems to rediscover the importance of manufacturing and the re-industrialization of the economy. Today, the US share in world manufacturing has dropped to 20% and has been matched by China. During the past two decades, the US, Europe and Japan have all suffered a drastic drop in their manufacturing base. In addition, many companies are now reviewing the pros and cons of extreme outsourcing of their activities: how much cost have been saved, how much complexity in the business model has it created, how many more competitors has it generated?. Finally a “return to basics” approach will imply a critical increase in productivity in advanced economy. This will be achieved through innovative policies, more flexibility in labor relations, a new partnership with trade unions and probably some social turmoil.