Category Archives: General

The London Olympic Games – a two sides bet

I was looking with great interest to the economical figures of London Olympic Games and I’ve heard too many times that the British “Olympic Games bet” is not in UK’s favour. I’ve heard how investments went from an estimated £9.3bn to an actual £15bn and how disastrous this is during (I would avoid to say global) economical downturn.

Ever since I’ve seen, a few years ago, the development plans London intended to make for this event, I knew it was a smart move, regardless of the short term outcome. The East side of London was always seen as the underdeveloped part of the city and the opportunity to bring it up in such a short time with only a small percentage of local contribution is a side of the story I see most of the analysts are overlooking. Let’s see some of the figures, as presented by Financial Times:

Some other important figures:

  • over £7bn contracts have been awarded to British companies which means workplaces and in the end, money returned into the national economy;
  • almost £10m event tickets sold. Needless to say, the cost of the event ticket is a very small fraction of the attendance cost which makes an exponential increase in the overall British income.

I’m looking at the event costs comments and, unfortunately, I see a very narrow “what do I get today” mindset. Let’s take a look further. Let’s say the Olympic Games are over and the actual income did not reach the actual spent.

A smart eye would see the following:

  • The East-end of London (Lower Lea Valley near Stratford) now has a brand new 80,000-seater Olympic Stadium for future events.
  • 5,000 homes have been built as residence for many families following the conversion of the Olympic Village after the games.
  • The transport links to the east of London have been significantly upgraded – £1bn improvement to London East line, extensions to the DLR, 45% capacity increase for the Jubilee line.
  • New venues have been built in the East London: Olympic Park stadium (athletics, hosting opening/closing ceremonies), Olympic aquatic centre (swimming and diving events), Olympic velodrome (track cycling), Olympic hockey complex, Olympic multi-sport complex (basketball, handball, volleyball, modern, pentathlon events),  Greenwich Peninsula hall 1 & 2 (badminton, gymnastics, table tennis), Broxbourne (canoe slalom), University of East London (water polo facilities), Olympic tennis complex.

All these are resources to bring more events than hosted at the 2012 Olympic Games in the future. London has built up in East London a money-making Olympic machine. Not for today but for future generations as well. Need I say more?


The real crisis? A society gone mad with bureaucracy

Barry Schwartz makes a passionate call for practical wisdom as an antidote to a society gone mad with bureaucracy. He argues powerfully that rules often fail us, incentives often backfire, and practical, everyday wisdom will help rebuild our world. Enjoy!

CEO Survey – Economic Perspectives and Labour Market Tendencies in Romania in 2012

PwC released earlier this year, within the World Economic Forum at Davos, the 15th edition of the Global CEO Survey 2012, a report that analyzes the views and forecasts of over 1,200 CEOs from around the world, making it one of the most important instruments for testing the future trends of the global economy. This year is the second time that PwC Romania launches a separate edition based on the answers of local CEOs, thus providing local business leaders with the opportunity to share their vision, priorities and concerns regarding the evolution of the local and global economy.

PwC Romania has the pleasure to invite you to the launch of the results for Romania from the 15th edition of the Global CEO Survey 2012. The launch will take place within an event organised jointly with Ziarul Financiar, CEO Survey – Economic Perspectives and Labour Market Tendencies in Romania in 2012, scheduled for 28 May, at Radisson Blu Hotel (Atlas Hall) in Bucharest, starting with 9:00 am. Please find the agenda below:

Agenda of the event:
9.00 – 9.30        Welcome coffee and networking
9.30 – 9.40        Introductory address Sorin Pîslaru, Head Editor, Ziarul Financiar
9.40 – 10.00      Keynote speech Mariana Câmpeanu, Minister of Labour, Family and Social Protection
10.00 – 10.30   Presentation of the main results of Romania CEO Survey – Vasile Iuga, Country Managing Partner, PwC Romania
10.30 – 12.30   Round table and Q&A attended by Mariana Câmpeanu, Vasile Iuga, Sorin Mândrutescu, CEO Oracle Romania and President of AmCham Romania , Robert Arsene, CEO Agricover, Dan Şucu, CEO Mobexpert, and Sorin Pîslaru, Ziarul Financiar

Will Germany drive a recovery in the Eurozone?

Countries using the Euro de jure Countries and...
(Photo credit: Wikipedia)

The recovery and long term sustainability of the Eurozone is currently reliant on strong German growth, continued ECB intervention, sustained investor confidence in Greece and political stability, none of which are certain.

It looks like Germany is the largest and strongest economy in the Eurozone. It makes up 28% of Eurozone GDP and grew at 3% in 2011 adding 0.8 percentage points to Eurozone growth in that year. The performance of the German economy is important as it provides demand for exports from other Eurozone countries and acts as a bellwether for the Eurozone as a whole. Net export growth (exports minus imports) makes a considerable contribution to German growth, around 0.8 percentage points in 2011. This is based on strong trade relationships with the US, Brazil and the rest of Europe. A PwC report on Eurozone shows that exports to Brazil and the US made the biggest contribution to growth in 2010 and they expect this trend to continue in 2012, although slowing growth in Brazil is likely to reduce its contribution.

Many forecasts show that the German economy will grow modestly in 2012. However, should the German economy tip into a recession, this would compound the problems in the rest of the Eurozone.

What do you think?

Fighting corruption – how do we do it?

Corruption is considered a global epidemic that costs the economy more than $1 trillion annually, according to estimates by the World Bank Institute. The 2011 Corruption Perceptions Index shows that public frustration is well founded. No region or country in the world is immune to the damages of corruption, the vast majority of the 183 countries and territories assessed score below five on a scale of 0 (highly corrupt) to 10 (very clean.) New Zealand, Denmark and Finland top the list, while North Korea and Somalia are at the bottom.

“This year we have seen corruption on protestors’ banners be they rich or poor. Whether in a Europe hit by debt crisis or an Arab world starting a new political era, leaders must heed the demands for better government,” said Huguette Labelle, Chair of Transparency International. Following is one of the best “soft” campaigns I’ve seen so far. It comes from Mexic so the sound is in Spanish but it also has English subtitles:

Steve Jobs’ most inspiring speech

I’m not going to praise Steve Jobs today nor will I go through his life in any way. I’m just thinking that if there is anything money could buy, Steve Jobs was one of those that would afford the bill but this is already history and somebody else will make use of his assets from now on. Will his name mean anything else to me in a few years, except some connections to the iPhones and iPads surrounding our daily life?

A few years ago I’ve seen the speech below. I considered it one of the most inspiring ever and I still do. If there is anything I will remember about Steve Jobs in the coming years, I believe this is it. He held the speech at the Stanford’s 114th Commencement on June 12, 2005.

World’s business-friendly cities

Business in London
Image by Stuck in Customs via Flickr

According to a recent PwC study, the leaders in business friendliness are: Hong Kong, Singapore, New York and London. Lesson learnt: it is not geography, a specific cultural profile or historical experience that matters in the end when it comes to business investment.

What does matter, as the variables in this category indicate, is a combination of flexible labor policies, openness to the rest of the world, and the ease of starting and maintaining an enterprise (which embraces the stability of a city’s fiscal and regulatory environment).

American cities continue to lead the rankings this year in degree of employer flexibility to create work schedules and ease of firing. Indeed, were it not for the severe visa requirements of the United States, they would arguably dominate this category. The relative improvement of the continental European cities is a notable change from last year. Paris fell to the bottom five of last year’s rankings but finishes in the middle this year.

Berlin is just above Paris this year, although Frankfurt was just below the French capital last year, three places from the bottom. Stockholm continues to prove its global competitiveness by placing in the top half of the rankings. Toronto, however, is the city that continues to impress, ranking fifth this year in a larger field, up one place from last year. It also is among the top three in the new variables, including first in workforce management risk. If it improved its standings in hiring and firing, as well as visa requirements and flexibility (which are national restrictions), Toronto would be among the easiest cities in the world in which to do business. Sydney also rises conspicuously in this year’s rankings, moving up five places from last year’s report to just barely behind Toronto. Sydney also comes in first in the new category of ease of starting a business and ranks high in both ease of hiring and firing. Again, however, Australia’s visa policies impair Sydney’s abilities to compete at the very highest level in ease of doing business – which, in this case, is particularly noticeable given that Sydney should be a prime competitor in Asia to Hong Kong and Singapore.

What is most striking in the end about the top cities in this ranking is how important open access to the world is to achieving the very top spot. Indeed, it is ironic that Hong Kong (about which there was some fear regarding its business environment after its return to Chinese sovereignty) now ranks second in ease of entry, as it did last year, and first in flexibility of visa travel – up from third last year.

More about cities of opportunity here.

Inflation and oil prices forecasts

Oil prices 1996-2008 (not adjusted for inflation)
Image via Wikipedia

A range of data from various countries showed inflation accelerating during March: the euro area’s annual rate rose to 2.7%, the U.S. reported a rise to 2.7% in its consumer-price index, in India headline inflation leapt to nearly 9%, and in China consumer prices recorded their biggest increase since July 2008, rising by 5.4% year-on-year.

The chief cause was higher petrol prices and forecasts are not encouraging. Barclays, in its Oil Market Update released on March, forecasts that a barrel of West Texas Intermediate (WTI) crude oil, the benchmark U.S. grade, will sell for an average price of $185 in 2020. That’s $38 higher than the current all-time record high reached in the summer of 2008, when oil topped $147 a barrel.

Key recent changes to the economic forecast

NASA Satellite Image of Japan Captured March 1...
Image by NASA Goddard Photo and Video via Flickr

Key recent changes to the EIU’s world economic forecast include: Japan growth cut to 1.4% this year; higher average oil prices; raise in US growth forecast for 2012; slight raise to GDP growth forecasts for the eurozone and reduced level of US dollar appreciation against the euro.

I wonder if this is not rather an optimistic figure. I’m mainly thinking of Japan. They’ve had four unprecedentedly large disasters lately: an earthquake, tsunami, partial power outage, and the nuclear power plant accident, which is the most serious problem at the moment. But this is not all. You can see national health issues rising up, the contaminated food will cause a major drop-off in local agriculture businesses and the damage from the earthquake on the capital stock remains to be seen.

The events seem to turn into a massive leakage of radiation and, unfortunately, to contamination of a meaningful portion of the food supply. Consequently, agriculture in the northeast of Japan is expected to be seriously affected. In such a scenario, distribution channels would be disrupted and Japan’s food imports would go up. On the other hand, industrial production and exports are expected to go down which means that the trade balance could easily fall into deficit. I would expect Japan to be partially recovered by the end of the year if no other major disaster is coming but I still think the economic forecasts I’ve seen so far are too optimistic.

The rest of EIU’s forecasts are common sense considering today’s political agenda.