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18 Apr 2018

Prepare for next recession

Prepare for next recession
Retailers should start preparing for a recession in the United States and could benefit from finding emerging markets with open economies, advised Ira Kalish, Chief Global Economist for Deloitte, on Wednesday.

Delivering the opening talk at the second day of the World Retail Congress in Madrid, he flagged India, Indonesia, the Philippines, Vietnam, Chile, Peru, Ecuador and Panama as markets with strong potential.

“In the US a recession is ultimately coming. They always do,” he said. “Invest heavily in brand, in differentiation, in technologies that allow retailers to keep their prices low and technologies that provide ways to better understand their customers.”

However, there are still opportunities in Europe to be tapped, said Dr Diego Rodriguez Palenzuela, the European Central Bank’s Head of the Business Cycle Analysis Division, at the Directorate General Economic Developments.

He pointed to “accession” countries due to join the European Union and said the reforms done by EU countries during the economic downturn were yielding fruit.

“The eurozone has certainly become a place where investment should be attractive”, said Dr Palenzuela.

Kalish warned that protectionism in the United States will impact prices, consumer spending prices and supply chains. A recent tax cut could be a boost to economic growth but benefits higher income earners who may save the extra income.

In terms of China, Kalish said the country would be affected by an ageing population.

“Even though the one-child policy has ended they still aren’t having a lot of babies,” he said. “They got used to having one child.”

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