'New Economy' Presents Challenges, Opportunities

Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company
7th World Chambers Conference
Mexico City, Mexico
June 8, 2011

What a pleasure it is to participate in this important dialogue and to be with all of you from the Chamber of Commerce community around the world. And what a privilege it is to be on this panel with my esteemed colleagues and friends. I look forward to a great discussion.

Tackling an issue as broad as the status of the current global economy is no easy task, but I will try to give you our perspective at The Coca-Cola Company.

We do business in over 200 countries and touch every economic condition in the world. Broadly speaking, what we see today is a global economy that's on the mend. An economy in recovery. And let me emphasize that it's a fragile recovery.

The rate of recovery is very uneven depending on where you are in the world. China, India, Brazil continue their surge. Russia, which has been more volatile, is also growing again. Several South Asian, Middle Eastern and African nations have been largely "crisis unaware."

Indeed, this year Ghana, Qatar, Angola, Ethiopia, Liberia, Mozambique, Vietnam and Laos will be among the top 10 fastest growing economies in the world. And, of course, North America and Western Europe are still in the midst of a reset.

Consumers worldwide remain cautious, and the prevailing feeling is that the overall recovery we're experiencing today is a very fragile one, to say the least.

That's the global landscape as we see it at the moment. Uneven. Fractured. Turbulent.

Overlaying this are what I call 5 Burning Questions -- five massive factors that will shape our businesses, governments and civic institutions for the next 10 years and beyond.

These five are:

1. Global Inflation.
2. China.
3. Global climate change.
4. Resource scarcity... and
5. Demographic shifts.

Let me briefly share some thoughts on each of these, starting with global inflation.

The huge injection of government spending over the past two years in North America and Europe, coupled with rising commodity costs, have created sustained inflation in virtually every nation.

At the same time, rising commodity costs - especially food costs - continue to fuel even higher inflation rates across the BRICs and much of the developing world. The recent events in Japan, North Africa and the Middle East further complicate the picture.

I am not sure if we fully know yet what the long-term impact will be on inflation. How much will governments cut spending in the next five years to bring down deficits and debt levels? How will China react?

China is the second burning question. It continues to pull the world along. Its economy is expected to grow 8 percent this year, and the central government continues to invest in housing, transportation and water conservation projects to help speed growth. Income tax reform and wage hikes could also help spur consumer spending. And, of course, as developed markets continue to recover, China is poised to see a rebound in exports - but to what extent still remains a question.

China along with the U.S. and Europe will also play a huge role in shaping the third burning question - Climate Change.

The lack of a deal in Copenhagen two years ago, coupled now with rising oil prices, further clouds the picture. Trade and diplomatic disputes over carbon will likely be the norm for the next few years. This leads to the fourth big question - energy and resource scarcity.

Demand for fuel, food and other commodities will only continue to spike as global population and wealth increase. Which leads to the fifth burning question - demographic shifts.

More people plus more wealth equals prolonged demand, the likes of which we have never witnessed before. And, of course, looming over all of these trends is the question of the long-term implications of the political turmoil we're seeing in the Middle East.

Beyond the geopolitics, huge questions remain in terms of future energy security, migration and trade development, among others.

For you in the global chamber community, the next 10 years will present enormous challenges but also equally breathtaking opportunities. With a billion new people entering the middle class by 2020, we're going to experience unprecedented mobility as people search for jobs and lifestyle opportunities in growing economies.

A recent Gallup poll, showed a very interesting trend. Overwhelmingly, the people around the world who expressed the greatest desire to emigrate to another nation were those who were the most educated and most successful financially.

What's prompting them is a general anxiety over their personal and economic liberties. The more open a society is for both personal and economic freedom, the greater the magnet these nations will become for people.

Chambers play a huge role in promoting personal and economic freedom. And in doing so, you help create:

1. Greater global trade opportunities.
2. Greater foreign investment opportunities.
3. And greater economic and entrepreneurial development opportunities.

You, as chamber leaders, are in a unique and powerful position to influence positive commerce and trade policies that benefit your national economies, businesses and communities.

This congress is a great opportunity to explore best practices and share new ideas in an open and productive manner.

I look forward to continuing that discussion with you today and wish you all the very best.

Thank you.