Page 16 - Accelerating out of the Great Recession

INTRODUCTION

especially poorly run ones—will be placed under enor-
mous stress. This will force the reshaping of the compet-
itive landscape in many industries, as well as the redefin-
ing of fundamental business dynamics.
2. It prompts governments to become more activist. We expect
to see an increase in protectionism—embracing trade,
employment, reindustrialization, and finance. There will
be greater regulation, and some governments will further
tinker with fiscal and monetary policy, whereas others
will take on greater ownership of private enterprises.
3. It forces a change in the nature of consumption. Consumers
in emerging markets may well increase their spending,
but not by enough to offset the weak growth in con-
sumption in the United States and Western Europe,
where consumers will save more in the face of greater job
insecurity and reduced retirement provisions.
4. It triggers a process of deleveraging. This occurs as individ-
uals and companies (and eventually governments),
weighed down by huge and unsustainable levels of debt,
recognize that it is payback time. This will act as a fur-
ther drag on global economic growth.
5. It sparks an acceleration in industry restructuring. Tough
economic times tend to expose structural weaknesses—
just look at the U.S. auto industry. Poorly grounded busi-
ness models and excess capacity, among other problems,
will force companies—especially those in mature indus-
tries—to adjust to or exit the market.

Yet, even within a low-growth economy, and despite all this
change and restructuring, we believe that the aftermath of the
Great Recession will present opportunities for growth—even

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