Podcast conversation (Around the Horn) hosted by Tom Burton with Mahesh discussing global economic conditions (recorded Nov 8, 2023). They compare the relatively strong U.S. economy (low unemployment) with regions showing weakness (Canada entering recession, China slowdown) and regions still growing despite high interest rates (India with GDP ~8–9%). Europe is described as flat (~1% growth) overall, with Germany performing relatively well. Japan has long-run flat growth/stagflation; Korea is resilient and innovative. The discussion focuses on implications for distribution and manufacturing firms operating globally.
Chapters
But have somebody ask you a question related to that. You know, we, we typically are talking on, on our podcast each week mostly about what's going on here in the US but you're responsible on, on helping develop the channel side of things for 3M and how many countries?
Pretty much global.
Global, right. Yeah. So, and I know we were talking a couple weeks ago, you know, some changes going on and 66 countries that you had mentioned, and we won't get into that part of it, but hundreds of countries. Right. So the reason I bring this up and ask this question is I talk, you know, occasionally in my conversations with regularly. Obviously in Canada, some a little bit in Latin America, a little bit in Europe, we're talking to companies. But you know, the sentiment in the US as we talk to wholesale distribution and for the most part manufacturing companies is, I'll stop short of saying bullish. But they're growing. Right. They might be feeling a regional pinch on something, but in general the mood is good. Right. The sky is not falling. Chicken Little isn't running around. What's your take on that though, globally? Is that a similar feel from distribution or do you feel a little bit more caution that you see maybe in Asia or parts of Europe where you're dealing with people?
Yeah, yes, exactly. U.S. economy has been doing well in general compared to. Still, it's holding on. Right. Unemployment rate is low still and etc. Canada is entering into a recession. We can feel that, we can sense that. And the data also supports that feeling. Pockets of the rest of the world are growing still, despite high interest rates. And those are the countries that are always used to operating in a high interest rate environment and high.
Okay. Like we're comfortable with what's going on.
Yeah.
Like India, for example, they're growing, their economy is growing high. The GDP is expected to grow around 8 to 9%. So highest big economy growth. Right. So.
Right.
Whereas China is going in the opposite direction. So pretty much every company that's operating in China is feeling the pinch of the slowdown of the Chinese market. So when you talk about other big economies, Germany always does well. And we'll talk a little bit about Germany and our exports. Extremely interesting country. They buck the trends very well. Whereas France and UK to some extent seem to be following the traditional, you know, up and down cycle. Right. So pockets, I would say pockets of different parts of the world are growing still and pockets are either either flat or below. So.
Okay, I think that's a really interesting.
Yeah. Europe as such is, is being on a very flattish 1% growth type of an environment for a long time now.
Right.
Overall.
So I think that's a really interesting point, Mahesh though, about countries that maybe are a bit more immune or under, you know, not, not so affected by the high interest rates and the, in the inflation aspect of things. I mean, that's very new to the U.S. if you, you know, for many, many years and so. But other countries tend to operate or have operated that way for many years. So I, it's very interesting when you start thinking about a different dynamic. What are you used to, you know, do you have the muscle, you know, the muscle memory for those things already or not, which we don't really have here or haven't had here and what we're doing. So I think it's a great point.
Yeah. And again, a couple of other countries, Japan has always been a flattish stagflation, has been going on for two decades now. Right. But they are finding new ways of technology wise. They are very advanced. Right. And then Korea has always again done well, I would say despite everything else that's going on, they've been pretty innovative overall.
So. Yeah, that's good. Well, before, before we jump ahead to the other article, you know, a takeaway from this, which I thought was kind of interesting is, you know, they referenced that this was the 12th consecutive month that the PMI remained below 50, which they just said, obviously if it's below 50, indicates contraction in manufacturing. But the reference point that I thought was intriguing here a little bit was that it's the longest stretch since 2007, 2009 they called the Great Recession. And so I look at that and I think, you know, we hear this stuff, the discussion, you know, maybe, maybe recession's coming next year or then you hear other pundits talk about are we already in one or a mild recession that we're already in soft landing. All of these things I would throw out that this probably suggests at least, you know, in this manufacturing segment is, what is it, 11% of GDP. Right. So it's pretty, pretty major factor as we talk about this. This might suggest, you know, that that mild recession piece has been there for the last 12 months as we're kind of looking at this already. So something that we, you know, need to continue to continue to pay attention to. So.
