#10yearchallenge for economies and markets

We take cue from the social media phenomenon #10yearchallenge to tally markets and economies over the past decade.
Taimur Baig, Masyita Crystallin08 Feb 2019
  • Crude oil, while volatile, has been flat over the past ten years
  • Gold it is up 50% since early 2009, but it peaked in 2011
  • The S&P500 has returned 300% and the DXY gained 13%
  • China’s real per capita GDP doubled during this period…
  • While India’s increased by 78%, Singapore’s by 32%. But the US gained just 11%
Photo credit: AFP Photo


How have markets and economies done over the past decade? We take stock of the performance of selected asset classes (gold, oil, equities, bonds, credit) and economies (some key developed and emerging market ones) in this piece.


As the global financial crisis unfolded and quantitative easing ensued, the combined central bank balance sheets of the US Fed, Bank of Japan, and the European Central Bank doubled (from USD3trln) in a year (2008-09). G3 central bank balance sheets continued to expand after that, peaking at USD15trln at March 2018. With Fed tapering in place, there has been a modest decline in liquidity, but as the chart below shows, it is still exceptionally ample by historical standards.

Source: Bloomberg, DBS Group Research.


Energy markets were volatile over the past decade, with crude oil peaking at close to $120 in 2011 and troughing near $20 in 2016. US Shale became the major destination of oil investment and subsequently a key factor in global supply. Countries like Iran, Libya, and Venezuela saw large fluctuations in exports, and renewables became more mainstream. Through it all, point to point, oil was in fact flat.

Source: Bloomberg, DBS Group Research.


Gold has not gone out of fashion and central banks have been busy adding gold to their reserve assets. And yet, gold peaked way back in 2011, correcting sharply thereafter as global risk aversion subsided, and has been trading at a narrow range in the past three years.


The USD appreciated by 13% against developed market currencies (DXY) during this period, but was flat against Asian currencies (ADXY). The CNY, after a sharp bout of appreciation (from 6.8 to 6.1 against the USD (2010-13) and major gyrations thereafter, is basically where it was a decade ago.

During this period, the Sing dollar corrected mildly against the USD (6%), while some key emerging market currencies sold off sharply (INR: 50%, IDR: 40%, MYR: 18%). Currencies of Asia’s wealthier economies did better (KRW is 11% stronger since early 2009, while the TWD is also stronger by 6%).


Investors would have done exceedingly well by going long US equities during this period, as the S&P500 returned 300%. While some other markets returned well too, nothing came close to the US, especially when currency fluctuations are taken into account. India, for instance, returned 250%, but a large part of that gain is wiped off when the INR’s 50% correction is taken into account. China had its currency broadly stable during this period, but the Shanghai stock exchange only returned 70%, a far cry from the US stock market.

Fixed income

With exceptionally strong support from governments and central banks, bonds did well across the board during this period. Global search for yield was widespread, compressing spreads and boosting fixed income returns.

Source: Bloomberg, DBS Group Research


As short-term rates were lowered to close to zero, and QE continued, curves showed a general tendency toward flattening form 2014 onward, with the present, nearly non-existent spread in the US underscoring the late stage of the ongoing expansion.

Source: Bloomberg, DBS Group Research.


A decade ago, the governments of China, US, and Euro area had to resort to substantial debt issuance as a counter to the deep demand shock of the GFC. The legacy of that is seen partially in the following chart, with significantly higher debt burden in the world’s three largest economic areas. We stress partial, as much more debt has been issued off the balance sheet of central governments, especially in China. The picture is even more dramatic if that is taken in context.

Source: IMF Fiscal Monitor database, DBS Group Research. 2018 figures are IMF projections

Real GDP per capita

Among the various measures of national income, we prefer real per capita GDP adjusted for purchasing power parity. The following chart yields a few key points:

• China has grown impressively over the past decade, with its real per capita GDP doubling. However, despite such growth, the country is still a middle income one. Greece’s per capita GDP, for instance, is still 60% higher than that of China.

• India has grown impressively too, with its per capita income up 78%. But compared to China, it has lagged. A decade ago, China’s per capita income was twice that of India’s; today it is 2.3 times larger.

• Greece may remain much wealthier than China, it has had a terrible decade of income contraction. Today, its per capita GDP is 21% smaller than in 2008, reflecting the depth of its economic crisis.

• US markets may have delivered outsized gains since 2008, but its economy has done little. Today’s per capita income is only 11% higher than it was a decade ago. Given stagnant wages (until recently) and rising inequality, even that growth masks the real stagnation in the US.

• Finally, Singapore, where the narrative is about aging, poor productivity growth, and structural slowdown, the income outcomes are actually very impressive. On a purchasing power parity basis, Singaporeans are, on average, some of the richest in the world. Its real per capita income, both level ($87k international dollars) and growth (32% over the past decade), are truly towering.

Source: IMF World Economic Outlook database, DBS Group Research. 2018 figures are IMF projections

What about the next decade? Past performance is by no means a marker for what’s to come. US may well surprise on the upside if productivity picks up just as redistributive policies boost income of the average American. But it would be nearly impossible for US markets come even close to the gains of the past decade The USD may not be as strong.

India may close the gap somewhat vis-à-vis China. Oil and gold may well lose their appeal as renewables take hold and inflation remains tame. We shall see.

Highlights of the week:
India: RBI’s dovish turn
Brexit endgame: Deal or no deal

To read the full report, click here to Download the PDF.

Taimur Baig, Ph.D.

Chief Economist - G3 & Asia

Masyita Crystallin, Ph.D.

Economist – Indonesia & Philippines

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