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Rays of hope at CFO Conference

Brighter prospects for Club Med countries

Growth opportunities for Turkey as well as brighter prospects for Club Med countries provided the backdrop to the latest CFO Conference.

For a cool November day in Munich, the INREV CFO Conference generated considerable warmth. Delegates were treated to lively presentations ranging from the intricacies of asset liability modelling to emerging trends in global taxation and insights into effective risk management. And the day was book-ended with two fascinating – and sometimes contrasting – views of the global economic outlook.

Dr Tobias Just, Managing Director, IREBS Immobilienakademie, opened with a compelling story about opportunities for growth and investment in China, India and Latin America. He highlighted the potential for Turkey to become the next China, as well as the bridge between Europe and Asia. Tantalisingly, he offered a view on the prospects for Africa – a region with instability, for certain, but also one with opportunities for growth over the medium term, based on its burgeoning demographics.

Dr Tobias Just, Managing Director, IREBS Immobilienakademie, opened with a compelling story about opportunities for growth and investment in China, India and Latin America. He highlighted the potential for Turkey to become the next China, as well as the bridge between Europe and Asia. Tantalisingly, he offered a view on the prospects for Africa – a region with instability, for certain, but also one with opportunities for growth over the medium term, based on its burgeoning demographics.

The concluding chapter of the day came from Andrea Boltho, Emeritus Fellow, Magdalen College, University of Oxford. His theme – brighter prospects for the Club Med region – shone a spotlight on the comparative strengths and weaknesses of the individual members of a region that has, until recently, been widely viewed as a “basket case”. He began by suggesting that there was light at the end of the tunnel: “We’re coming out of recession and that’s inevitable. Even the Club Med countries will come out of it eventually,” he said, though firmly emphasising the final word of his sentence.

Comparing what he defined as “Eurozone North” and “Eurozone South”, Boltho identified the differences that explained the gap in the two regions’ respective fortunes. Principal among these was the GDP-to-debt ratios. Club Med countries clearly have too great an imbalance. There was, said Boltho, “Still too much debt and house prices are still too high.” He explained how, between 2013 and 2016, the Club Med region would see 1% taken out of GDP continuing the long and painful process of austerity.

Even the Club Med countries will come out of recession eventually

Ultimately, he arrived at his own “arbitrary and subjective” ranking of the best and worst of the southern region countries based on an un-weighted average of five key factors. Lacking any exchange rate risk and with spiralling wage inflation, ever-mounting public debt and serious loss of competitiveness Greece is, according to Boltho, at the bottom of the pile. Sentiment in Italy, he said, had been negative since Berlusconi’s accession to power in 1994, pushing it into third place: “La dolce vita is not in Italy, but in Sweden. It has moved from the Mediterranean to the Baltic Sea.” Portugal, said Mr Boltho was doing enough to warrant a second place slot. But, despite the fact that it had “built about 10 phantom cities”, Spain had reformed its labour market to some extent, improved productivity and increased exports, meriting the top step on the podium.

Arbitrary or otherwise, Boltho’s view left a strong sense of progress and a qualified ray of hope.