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90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.com                    A glance at the UKs economy   ...
90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comThe US, being the most powerful economy in the wor...
90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comSaving becomes a sensitive subject in hard time; w...
90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comdifficulties: Mining, Energy, Hotel and Restaurant...
90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comAmong the three countries, Philippines has a stron...
90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comHowever its not all. Next graph illustrates the Na...
90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.com                         Summary: UK at a glanceBa...
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A glance at the uk economy (netsaving, fdi & debt) thienhuong

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Part 2: A glance at the UK economy.

Net Saving, FDI and National Debts

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A glance at the uk economy (netsaving, fdi & debt) thienhuong

  1. 1. 90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.com A glance at the UKs economy Part 2: Net Saving, FDI and National DebtUK: NET SAVING WENT DOWN IN HARD TIMESAVING RATE KEPT FALLINGIf we generate a graph of the World saving for the last 20 years, it will look prettymuch like a flat line. The mean rate of total savings has been around 20%. However, national saving rates range variously, especially between developing countries anddeveloped countries.The US, the Philippines and the UK are good examples for this.By 1990, net saving of the UK was $USD 61,000 Mil and in following years, thecountry enjoy a gradually increase in saving. In year 2007, the country net savingeven reached as high as $230,707 Mil, however this year also marked the start of adownslope trend. By 2010, net saving of the UK dropped down to $40,145 Mil, theworst recorded in 20 years.
  2. 2. 90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comThe US, being the most powerful economy in the world somehow experienced asimilar trend. The country had done a good job beautifully increasing national savingfrom $422,387 Mil in 1990 to more than a billion in three continuous years of 1998-1999-2000. In three years after that, net saving dropped down to $640,566 Mil andthen went up again, nearly reached a billion in 2006. Since 2006, saving of the US canbe considered the worst period of its two decades. By 2010, the giant only had$68,807 Mil in saving.Philippines, this populous developing country has managed to keep a nice increasingsaving from only $5000 Mil in 1990 to almost 7 times greater in 2000; $34,688 Mil.This net saving is very modest as compared with The US and UK, but in 20 years, itdrew a beautifully upward line.A look at the percentage of Saving Rate to Gross Net Income lets us understand thismore. Started with only a few percent higher, the Philippines been saving more andmore. The mean rate saving of Philippines during the time was 22% and its saving for2010 was 27%. The US & UK acted almost the same way. Both countries showed adownslope trending of saving, with a lower mean rate of 15%, both went down tosome 10% by 2010. This makes the gap of saving rate between Philippines and 2other countries as huge as 17%.
  3. 3. 90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comSaving becomes a sensitive subject in hard time; with worries people will save more.The graph showed that in gloomy year 2010, saving rate to GNI went up a bit. (TheUKs saving rate, however still felt deeper.FDI FLOW: BECAME QUIETERGlobal business has been becoming more and more dynamic and flexible; ForeignDirect Investment plays a growing role. FDI flow is in theme with globalization, thisobservation seems true for all three countries: before "internet time" - 1995, FDI werequiet but it has become more exciting since then.The chart illustrates a net FDIs fluctuate considerable from one year to another, whichis partly a function of busy economies. In the second half of 2000s, with the worldfinancial crisis, the flow of FDI fluctuates in a narrower deviation.During 2008 time, FDI outflow of EU dropped some 30%. Its easy to predict asimilar problem for UK; the economy dropped its FDI outflow by 28%. Its FDIinflow also fell, showed a smallest number since 2004 with total value of $USD 65.6Bil. Industries that are most (outflow) affected was: Finance, Real Estate,Manufacturing, Trade and repairs. For inflow, those are industries with lots of
  4. 4. 90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comdifficulties: Mining, Energy, Hotel and Restaurant. However, Mining stayed a shiningindustry as it increased in FDI outflow.The US had a high net FDI in 2000, right at time of Dotcom bubble but in recentyears it facing a silent FDI flow, like the UK. Last, Philippines, as a country receivingFDI, its net FDI has a positive relations to its economy growth. In 2008 - 2010, threeyears that Philippine was doing better than UK and US, its net FDI ranged between$1.2 and 1.6 Bil.All in all, a countrys FDI has a strong relation with its economy. It allows the transferof expertise and technologies, thus broad and strong FDI flows often indicate agrowing economy.
  5. 5. 90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comAmong the three countries, Philippines has a stronger FDI than UK and the US ascompared to its size of economy.NATIONAL DEBTS: RAISE MUCH WORRYIn 1996, top foreign debt country was North Korea, by 2000 its Mexico, in 2002 itsBrazil, in 2004 its Japan, and since 2005 the US has been leading this. All countrieshad problem with foreign debts in history all went through a hard time, so this surelynot a good news.Second to the US in 2005 -2006 -2007 was the UK (!). Foreign debts show a greaterdanger to one countrys economy because its will become dependent on theeconomies it owes to. This make national debts become more of a serious problem.Above graph shows three countries nationaldebts since 1990, all with rising trend, andits GDPThe US marked 2011 with its debt rose to$USD 14,122 Bil, as high as its GDP. Philippines also experienced a rising debthowever it still keeps a safe margin Debt-GDP. The country seems doing the best isUK with its debt a lot lower than its GDPs
  6. 6. 90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.comHowever its not all. Next graph illustrates the National Debt per capita.By 1990 with $USD 3,206 Bil of national debt, divided by the population anAmerican would have a debt of $USD 12,845. By 2010 its $38,900. Similar, aPhilippiness national debt per capita also has raised from a small number, $198 tonearly a thousand, or 21% increased from year to year. It would be higher ifPhilippines population has grown with lower rate.From this angle, UK appeared to have more troubles, in 20 years its Debt per capitaraised from $7,613 to $18,860. With this 19% annually increasing debt per capita, by2015, a English man will share a debt of $46,980 with its country.
  7. 7. 90738 May 2012 Thien-Huong, ttdo@andrew.cmu.edu, thienhuong.do@gmail.com Summary: UK at a glanceBack to current financial situation, the UK is still doing fairly good as compared tothe rest of world. Its GDP is going up. Its high unemployment rate (8.3%), plus lowinflation (1.65%) and National debt raised worry but all in all its still under control.Its remarkable that the countrys economy in current time is quieter, thus, UK mightwant to look for possible solution for its future, such as: • Keep an eye on Finance and Banking industries: UK biggest banks HSBC Holdings, Standard Chartered and Barclays have a total market cap of $USD 250.65 Bil. So far the UKs giant banks are performing a lot better than the US. • In the US, City Group bailout costed US $12.3 Bil, plus recent $ 2 bn lost of JP Morgan prove that they have systematic problems and its might not be all. • If UK banking cant stand stable in current situation, the outlook can be worse than the US because three mentioned banking institutions size ($250.65 bil) are not small compare to that of US (388.34 Bil). • Improve and create good environment for FDI: in crisis time FDI flows seems resilient, it become quieter but it doesnt stop. Same recommendation for Philippines, they also should invest in infrastructures to attract more FDI inflow. • Set target for inflation rate. UK should set it higher, and Philippines should force it lower. • Create jobs. This is essential.References:Lecture Notes, TK Limhttp://www.ukpublicspending.co.uk/http://www.usgovernmentspending.com/http://stats.oecd.org/http://www.econstats.com/weo/CPHL.htmhttp://www.economist.com/http://www.nytimes.com/http://www.guardian.co.uk/

Part 2: A glance at the UK economy. Net Saving, FDI and National Debts

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