Talk:Sunset Sea Islands
Notes for GDP Calculation
Doing some back of napkin calculations here. To proceed, I will:
- reduce the starting/pre-junta GDP from ~$9 Trillion to approx. ~$6 Trillion. Closing the disparity between SSI's GDP and other wurld leaders' GDP would make it easier to believe that SSI's recession wouldn't destroy the wurld order.
- Assign weights to the components of SSI's pre-junta GDP (expenditure method). Weights from 1-5
- Make estimates on component change since the Junta's coup (April 2021)
Pre-Junta (<April 2021) GDP Breakdown
- Consumption, Goods, Services - 4 =~$1714.21 Bn
- Investment - 2 =~$857.14 Bn
- Government Spending - 3 =~$1285.71 Bn
- Net Exports - 5 =~$2142.85 Bn
Est. Change
- Consumption, Goods, Services - Most Decrease - >50% = ~$857.11 Bn
- Investment - Significant Decrease - >25% = ~$642.86 Bn
- Government Spending - Significant Increase + >25% = ~$1607.14 Bn
- Net Exports - Moderate Decrease - >10% = ~$1928.56 Bn
Summary
- GDP (Nominal), Est. as-of January 2023 = $5,035.67 Bn
- GDP % Change (April 2021 - Jan 2023) = (16.07%)
- GDP % Change, Long Term Est. (April 2021 - Jan 2026) = (~30%)
Rationale for change: expect the percent change above to be overall change from pre-junta to CY start 2023. Realistically, the greatest movement in these components would happen at the close of FY2021 with some ups and downs in 2022. Consumption is chosen as the greatest change and Net Export as the least change because:
- The event driving the recession is a change in governance which prioritises cultural and economic protectionism. Thus, the greatest barriers put up will be to importation, immigration, corporate transactions (M&As, FDIs), and other labour or ease of doing business issues.
- I can find no indication that the government would want to do unnecessary harm to its exportation of IT related goods and the provision of its key industries' services to foreign clients. Given the wurld has few alternatives who can provide the quality and efficiency of those goods and services on the scale required to meet depend, it is fair to assert that SSI's glubal customers/clients/consumers will still buy so long as SSI is selling- at least, in the short term until a more stable supplier/provider can arise. See the breakdown below for further details.
Goods and Services
Post history suggests that SSI is world leader in technology exports and a top provider of IT services, IT consulting, telecommunications services. SSI is also an aerospace innovator and provides satellite services like launching, outsourcing, repair, etc. Tourism/hospitality likely also contributes a large to a large percentage of the GDP.
Losses in these domestic goods and services would be significant but not too severe as the new administration's export regulations appears to be a more highly regulated form of the previous status quo. Inevitably, the loss of revenue generated by negative sentiment from the coup event would cause many clients and customers of SSI businesses to look elsewhere in the long term.
Consumption
While capable of producing a variety of tropical produce, SSI's higher standards of living and wage expectations likely makes the country's agricultural industries specialise or automate. Staple crops might be in high demand as an import. The country's businesses would also likely depend on a large population of offshore outsourced labour: customer care/support, accounting, other auxiliary services might be drawn from 3rd party providers from high-labour but low wage countries. Due to high environmental regulations, SSI also likely depends on imported products in the space of heavy industry, forestry, electronic hardware/raw materials (batteries, rare earths, silica), oil and gas, livestock agriculture, and other industries with a lower ESG outlook.
More stringent import regulations would see the cost of imported goods increase substantially, rising to values closer or comporable to the average retail prices of local suppliers/producers. Overall, rising prices coupled with a contracting economy would inevitably result in lower domestic consumption overall. This is probably where the largest negative change occurs.
Investment
Being largely seen as a stable, developed economy, SSI equities and fixed income securities are likely frequently traded by a variety of foreign actors. The coup event would likely throw the market for SSI investment into confusion and then rapid decline. Though the SSI is not banking or finance focused and high government regulation has probably stunted security offerings from smaller companies in the past, the economy will nonetheless experience the scarcity of foreign investment keenly. Innovation will falter with R&D spending and Venture Capital appetites being stunted the most. Overall, companies will contract and likely have to down-size, cutting non-essential or speculative projects. As a consquence, capital dries up and SMEs dependent on funding rounds or FDIs will likely close.
However, the SSI may become a target for finance and banking entities looking into speculative markets. The same entities with higher risk appetite that typically invest in emerging markets may take an interest. The new administration will also likely try to contain the investor fallout early on by creating economic zones or special legislation to give some reasssurance of stability.
Government Spending
Effectively a military junta, the new government will likely increase law enforcement and defence spending. Being xenophobic, the capital to do this will likely come from SSI's own banks. Essentially borrowing from itself and printing more money. Inflation is likely to increase by a large margin. For the forseeable future, Government Spending will by the rising contributor to SSI's GDP. Along side this will follow ever growing inflation and debt.
Offsets and Caveats
One item that could keep SSI's economy afloat in the short term is the (temporary) sustainment of its exports while creating greater consumption for domestic goods and services. This will be denoted by an improvement of its Balance of Trade. The wurld depends heavily on its IT and Aerospace goods and services, though the world market will seek to turn away from dependency further in the future, current business relationships are likely entrenched by long-term contracts and other intangible factors. In the short term, the decrease in its import value will outpace the lesser decrease in export values which will look good on paper.
Decrease in imports will drive demand (and therefore new businesses, jobs, opportunities) for domestic businesses. Being a high-technology country, SSI may finds ways to decrease costs and prices of domestic goods by use of technology (hydroponics, automation, ultra-efficient production methods, etc.) Unemployment may be somewhat contained by government initiatives to allow new businesses to start (and therefore increase employment opportunities); loosening environmental protection for companies to exploit resources, allowing certain industrial infrastructure to be built, etc.
Lots of parentheticals. I know.
Keep in mind that this pace is not sustainable long term. Key reason: loosing its stake in the glubal market will hurt exports in the long term. Drying up capital also means that the IT sector may lose its edge in being a top innovator. All in all, demand will likely fall in the long term.