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Published Feb 2, 2018

Constance Hunter Discusses International Finance

Constance Hunter, chief economist at KPMG, offers an enriching perspective on global finance, discussing her personal journey and the literary influences on her work, while delving into critical topics like economic forecasting, the evolving job market, and international trends affecting fiscal policies and growth.
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Episode Highlights

  • Japan's Economy

    Japan faces unique economic challenges due to its demographic trends and fiscal policies. highlights that Japan's working-age population began declining in 1993, coinciding with the bursting of its debt bubble 1. This demographic shift, coupled with almost zero immigration, has led to fiscal strains and deflationary pressures. Despite these challenges, Japan is managing its debt effectively by refinancing at negative rates, a strategy that describes as shocking yet effective 1.

    Imagine you're a corporation and you're overindebted and you can't default, but over time, you can refinance your debt with negative rates, meaning you get paid for.

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    This approach allows Japan to maintain fiscal health despite a debt-to-GDP ratio of 198% 1.

       

    China's Economy

    China's economic landscape is both a growth opportunity and a potential risk for the global market. notes that while China's economy is as large as the US, its per capita GDP remains lower, indicating a vast but not uniformly wealthy market 2. The command economy structure, with elements of capitalism, presents unique challenges and opportunities, particularly in data and analytics. However, warns of potential economic bumps that could impact major economies, as seen in past shifts in China's demand affecting global commodities 2.

    China is gonna see some bumps in the road that are gonna surprise people over the next two to three years.

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    These fluctuations underscore the importance of monitoring China's economic policies and their global implications 3.

       

    Birth Rates Impact

    Declining birth rates pose significant challenges to economic growth and labor forces worldwide. explains that many major economies, including Japan, Europe, and now the US, are experiencing negative birth rates, leading to stable or shrinking populations 4. This demographic shift contributes to disinflationary pressures, affecting potential GDP growth. introduces the concept of potential GDP, which combines the growth rates of the working-age population and productivity, highlighting the current low growth rates 5.

    We now have a working age population growth rate of 0.3%.

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    These trends suggest a future economy with slower growth unless productivity gains can offset demographic declines 5.

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