 The first picture, this picture is very interesting because if you're looking for the blue line, the blue line is the forecast the global GDP level we did in 2007. The red line is the forecast we did in 2008. So after financial crisis, we thought the global GDP would dip, but gradually go up like that, a little gap. This is for advanced economy. This is for the whole world. But this is the real global GDP level. You see the global GDP level today is a big drop and remain under the trend and go all the way forward. This is a big, big gap. We lost all those global GDPs in the past seven and eight years permanently. This is very important to understand. These crisis leave a much deeper, much bigger scar than everyone ever thought. This is for the whole world, even for emerging market. You will see they still pick it up, but still there's a gap. And in the advanced economy, the real concern is not only the gap is keep big and people keep wider. That means the growth still becomes slower. This is the real concern of a global GDP. And we permanently emphasize again, lost such a big chunk of real global GDP forever. So we operate the whole global economy in a lower level. I think that's the first very important concept. Because of that, all the country today is run under the potential output. So they have an output gap. But you see, all the advanced economy under the potential roughly 1.5%. Japan, Belgium, even US is still a little bit behind. Even in the advanced economy, China still 1% point under the potential. Do the whole world run under this potential? The output gap is still quite big. Why that? Why we have such a low potential growth? The few things quite interesting. Number one, investments is lower. You will see in the United States, the investments share to GDP compared with roughly, this is 14, this is 2007, you will see the US investments share in GDP, roughly 200% point lower. Investments are lower. In the Europe, the investments are much lower. Investments are only higher in China and in Brazil, in Russia, but in China, you know, the investments are way too high need to further adjust. Not only investment, the trade growth is much slower. This is the trade growth, this is GDP, global GDP growth rate. Trade growth is always stronger than global growth rates. This is 80, 89. In 90, particularly, trade growth is two times more. And in the year 2000, trade growth is much stronger. The first time, the trade growth is slower than global GDP growth. In the past 30 years, we never, ever observed that since it happened. The global trade growth is slower than global GDP growth. More than that, the really the issues confuse everyone. We're still looking for the reason. It's a global FDR is much lower. You will see the FDR 2000, 2007 and 2013, we see the global capture flow. But what surprised us is the real FDR in terms of share of global GDP is all global. Global FDR in terms of share of global GDP is a lower period by period today. Roughly global FDR in terms of share of GDP is 37% lower than year 2000. We lost 40% of FDR globally, which is a big impact for the global GDP and the global capital. Meanwhile, we see the huge global financial flow. The real capital flow actually slows dramatically. We're still looking for the reason. We're still don't know why the real capital flow were dropped in such a big way. If we're putting those together, you have a wake and the investments, you have a wake trade and you have a wake and FDI, obviously, growth will be weak. More than that. The real issues, we try to figure out what will be the potential growth for the next five years. You know, when we talk about the potential growth rates, basically, we talk about potential capital growth rates, we talk about potential labor growth rates, we talk about potential productivity growth rates. So this is the composition for the key issues. Since year 2000, the potential growth rate is pretty high in the advanced economy. It's in the emerging market. You will see deep quite a bit during the process periods, understand? But over in the next five years, we forecast the potential growth rates still much lower than the year 2000 to 2007. A little bit up from the advanced economy, in emerging market will continue low. The potential growth is a concept to measure the capacity, to measure the how much the system can grow. This is a very important concept. This is the base for the growth. Why then? We see the potential capital growth is weakening, which we show investments is lower. We see the labor surprise is weakening dramatically in the advanced economy because demographic change, because aging. And the particular key issue is the productivity growth today. Overall, all the world is weakening. The productivity growth is lower everywhere. In the advanced economy, in the US, in Europe, in the UK, in the emerging market, in China, in Brazil, in Russia, everywhere. So the key issue is how can we promote productivity growth? And you will see the productivity growth is lower. But still, if you're looking for the next five years, the potential growth is still heavily depends on the productivity growth. That's the real challenge for the next five years. The productivity growth has been slower. But for the next five years, the growth is still pending on the productivity growth. So the key challenge for the whole world is really how to boost this part of the growth, which is productivity growth, has become very important issue. And for the emerging market, there's a lot of people talk about that. We down revised the potential growth since the year 2000s. For the advanced economies, given the potential growth, we see we drop them roughly half percent of the point and compared with before the 2010. And also emerging market, the potential growth lost 1.5%. This is quite a big potential growth loss compared with the previous ones here, compared with this one you will see. And further, and this is emerging market except China. So China played a quite a big chunk in terms of the potential growth. The potential growth loss is a big issue. Because the emerging market lost quite a big potential growth rate. So this is the catch up. This is the emerging market growth rate, the advanced economy growth rate. So how much emerging market growth is stronger than the advanced economy? You will see this is roughly from 17 to year 2000, roughly around 1.5 to 2, really peaked. During the crisis time, emerging market growth picked up, now dropped down. So we expect to see the emerging market drop pass will slower go back to normal situations. Why emerging market slowed down? Really it's very simple. Because in the past 10 years, oil prices went high, now it's much lower. In the past few years, commodity prices went high, it's much lower. The full price is way high. So the commodity cycle is over. And you will see the trade value is much lower today. It's also from an advanced economy from emerging market as well. And also you see the interest rates lower very much during the crisis times and now it's going to pick them up. So external environments has really changed for the emerging market because the super commodity cycle is over because trade change is weaker and the easier financing, lower interest rates environments is almost over because Fed is going to raise interest rates. So those are quite a big changes, has quite a big impact on the emerging market impacts. And also advanced economy, weight growth has a big impact on the emerging market, but emerging market also will have an active impact on the advanced economy as well. We have to keep that in mind. You will see if an emerging market lower 1 percent of global GDP will impact a roughly 10 base point for US, quite a big 0.3 percent and roughly half percent of GDP growth negative impact on Japan as well. So we are really live together now. So the whole world is linked together, the global emerging market slowdown will have quite a big impact on the global GDP growth as well. China, everybody concerns about China gross slowdown, but the key issue will interest how much China gross slowdown will impact for the whole world. We have a very interesting study we see 1 percent of China's investment slowdown, let me emphasize investment slowdown is not a GDP, will impact China trade partners GDP gross slowdown. So roughly we'll have for Philippines, for Thailand, roughly 3.3, 3.4 career, roughly have a 1 percent investment slowdown have a 0.6 percent of the negative GDP gross impact on South Korea. This is huge. And on China's, this is manufactured partner commodity partners, you will see on Chile, on Jim Barberway, on Saudi, on Kazakhstan, roughly 1 percent of Chinese investment drop will have 0.3 to 0.4 potential GDP growth. Now think about that. This is not the two same thing. This is China's investment drop has a negative impact on China trade partners GDP gross drop. And China, we see need a drop 10 percent of the point of investment from kind of 44 percent of the GDP to roughly 35, 34. So 10 percent of an investment drop, how much will impact on the negative GDP growth on the China trade partners, which will be huge. And the second, think about that. The China need adjusted macroeconomic structure not only for today, for the next five years, maybe 10 years. So China's impact on its demand on the global commodity manufacturer trade partner, it's a long-term issue. So we'll have to understand that long-term impact from China to the whole war as well. So the commodity price because of that commodity price also the other reason probably oil price really job and understand that we see all your price will stay lower. Why that? This is the cost function of the oil production. It's not a fiscal cost. It's the cost production cost. You see on the Middle East, I'm sure the per barrel cost is only $29. Offshore share is only 43 and the extra heavy oil is really 53 deep water. So roughly share guess is today is around the $40, $45 per barrel. So the cost is really low. The real high end cost come to the oil sands found really deep waters. They do have a high cost of that. But over a big chunk of oil production still remain in the production cost around the $40 per barrel. So that's the reason when the monopoly can be broken down, everybody try to maintain the output. Since oil price drop, Saudi still produce 10.2 million barrel oil per day. US still produce 12.4 million barrel oil per day. Don't change it at all. With Iran, with Iraq join the supply side. So we'll proceed oil price will be low for quite a while, which is good news but also will create a different impact for the different country. Depends on your input and output as well. When we from the real economy move to the financial sectors, what we thought is really the central bank's balance is expanded dramatically, particularly in Japan. In all the advanced economies, roughly from 5%, 10% GDP increase to 15% as well. The key figure is here. It's here. The government death level is really way, way high. You will see this is the whole advanced economy, the death level. This death level is way high than the World War, the government death level. It's almost close to World War II. It's hard to believe see how high the government death they have today. It's for the world average, even for the emerging market, death level is way, way high. The death level has quite a few impacts here. Because one key issue is when you have a high death, you have pay high interest rates. It's hard to read this number. Let me just point one line. In the advanced economy in 2007, the total government death is 71.6% of GDP. Today, it's roughly 104.6%. So death increase roughly 40%. How much is that interest rate they pay? 2.9% of GDP that time, 2.9% GDP today. So death increase 40%. But the interest payments remain very low. Why is that? Because the interest rate is so low, which have profound impact on the low interest rates as well. We need to keep that in mind as mine. Interest rates are low. Everybody understand here? Yeah. I can jump later here. So everybody say interest low is QE, which is true, but it's not QE. You see the interest rates really pick the US interest roughly in 80s and all the way down, down, down, all the way to today. And the real interest rates is negative. But also tricky thing is when interest rates drop, quite a bit is the interest rates drop, but the capital cost then drop at all because van Boiland capital market. Now, the question is here. Will the interest rates go back and will interest rates go stay low? This is a fundamental issue because low interest rates change the production behavior, change the consumer behavior. This is a very important index for the whole world. And we expect to see interest rates to stay low level because the death pressure here. It cannot afford a higher interest rate. So whole things really link to each other now. So if we move to financial market, if we're putting them together, it's really the story I try to say is, yes, we lost a big chunk of global GDP. Yes, because crisis, the potential growth is much lower. Yes, because potential growth is lower, we operate under the output gap. So we need aggregate policy. We need the demand policy to push the demand to push the growth, right? It's a very straightforward as econ 101. But unfortunately, what I try to tell you in the second part is, there's no macro policy space. There's no monetary space. Central Bank's balances expand big enough already. There's no fiscal space because they cannot borrow more money because even in the today's level, if interest rates increase, every government will be in big problem because they squash the fiscal space. One percent interest increase, one percent of fiscal space shrink. So no fiscal space, more than that. We're also facing the financial market change. The big financial market changes really stretch changes. The whole banking intermediaries shift away from banking sector to shadow banking, to SS management company. You will see SS management companies really grow up strongly. It's holding compared with roughly pension funds, you know, I mean you will see this is really strong growth. And you will see the copper bonds overseas is very much owned by the pension fund now. The pension fund today becomes a big financial institute. Let me give you one number. In United States, compared today with 2007, the whole banking sector lend to the private sector, the real sector, dropped $286 billion. But the money come from SS management company. The lending from SS management company to the real sector increased 1.36 trillion. The whole financial intermediation shift away from traditional banking sector to the non-banking sector, which has a profound impact on what? On particularly on market liquidity issues. So when the central bank liquidity increase because of low interest rates, the market liquidity become very, very tight. And this is a typical chart to say how tight is the market liquidity. You will see the blue bar, it is the dealers infantry holding for the bonds. They need to clean the market. You see the peak is 400 billion in 2008. Today it's roughly only 100 billion. This is the index. So the dealers infantry is only 25% of the peak level in the process. But the bonds size needed to be cleaned increased roughly from 20 trillion to 40 trillion. So why market liquidity is so tight? I call the liquidity illusion issue. The bonds size increase two times roughly for 40 trillion. The infantry, the bonds deal a hold so they can clean the market drop roughly only 25% of peak level. This gap is a real market liquidity gap. So I always say this chart, it's a real liquidity illusion. The central bank liquidity and the market liquidity. And the shift really caused a big concern on those issues. And another concern is the dollars have become stronger. I'm putting two things together. It's not necessarily have to go together, but it's interesting. The red bar mean the number for crosses. You will see when dollar becomes stronger and in 80 you have a lot of crosses here in later 90s when dollar goes stronger again crosses again by that. When dollar goes stronger, dollar go back to US, the cost emerging market, the capital issues and when dollar getting stronger the copper sector balances and the countries balances become worse. They have to pay more. So dollar strong always associated on the balances management as well. And the fair to raise interest rates also a concern. Everybody talk about fair, fair is racist. So fair, I think I did a good job in terms of communication, make it very clear to everybody what is the policy. But real concern is in the market. The real concern is here. This is a fair, the forecast interest rates. This is a market forecast expected interest rates. This is the risk premium because low interest rates, the risk premium is so low and almost and the negative and the average risk premium should 175 base point 1.75% as well. Now the problem is if the fair the risk rate whether this curve will move to this curve, how soon, how fast. If this curve move to that curve, they will cause the global re-pricing all different risk of the assets. They will cause the market volatility. So fair the risk interest rates, I'm not concerned the capital flow today. The really concern is the hallmark response to that hallmark expectation move into the fair forecasting deadline. I think this move how soon, how fast. This is a big uncertainty here in the market given the market liquidity is very tight and the loss of this chart is also very scary. This is very technical. So the real another concern today is really NC but it's a serious in financial market interconnectivities. This bar showed how much interconnectivity increase. This is the U.S. Treasury. You could the global interest interest move roughly from 40% of the movement to 80% of the movement. Emerging market you see the index move also from roughly 45% to 75%. So you will see the this is U.S. high yield bounce market commitments. Coal movements increase really dramatically during the crisis. We are living such a tightly interconnected world which is bad news for portfolio management because I mean you invest in whatever the market doesn't matter because every market moving the same thing right. But it created a big problem for us. The real concern is when the market move into the one direction it soak all the liquidity. It make the liquidity extremely extremely tight. So you will see isn't the blue dose is the the Coal movements. The Coal movements levels varies from 20% to 0.8 and roughly varies. So this is liquidity become very tight and this is okay. So liquidity is pretty much okay. But the red dose is after crisis. What happened compared before crisis and after crisis connectivity increase the Coal movements increased dramatically. You will see most heavy parties here at that time most heavy parties are here now and move all the way to the liquidity tightening. It's even more in the derivative market. In the derivative market you will see the Coal movements and the liquidity is always moving sort of in a very different distribution map. But after crisis see all highly interconnected and with a very tight liquidity. The reason is very simple. If everyone into the one direction drove the money into the one direction of course there's no market. That's a real concern. If the Coal move towards this line we don't know how far, how soon, how big, how strong. We know if they move into that direction in a strong way the market will shift all the way to this end. We're facing a real, real serious liquidity challenge. So this is the things we experienced just a week ago when China stock market volatiles. The global market volatiles dramatically. You will see fix roughly from 15% jump to more than 40% just over a day and two days. The market can change very dramatically because we're living in such such interconnected world. Putting them together I think the message is very clear. Number one we lost a lot of global GDP because of crisis. The scarf is deeper and bigger and we all run under the potential growth and future potential growth also is awakening because the weak investment growth, the weak labor supply growth and also the weak productivity growth as well. And when we're facing the weak the growth we need to aggregate demand policy to push the growth. We don't have a policy space because we don't have monetary policy, we don't have a fiscal policy. So but financial sectors we're also facing challenges because the shifting in the market structures and because the strong dollar and the federal interest rates and possible market volatility as well. So what's the policy recommendation? The policy recommendation go very straightforward. Number one at this time maintain the macro stability still the key. The global cooperation become extremely extremely important today because we all live together and the most importantly given we don't have a demand side of policy space do the supply side things do the structural reform. These are the key issues and the structural reform in the product market in the labor markets in the service sectors in pension reforms all those structural reforms will play an important role to boost the potential growth for the futures invest in the infrastructure in the knowledge economies and long term on the innovation of SMEs. The structural reform is everything. We found the whole world needed to do the structural reform. It's a low-income country, it's an emerging market, it's in the advanced economy with the different roles in the different areas but for the next few years was a structural reform is the key thing to define the growth potential to define the growth of the whole world. I'll stop here. Thank you very much.