The importance of GDP growth to world and country-specific economic well-being cannot be over-emphasized. Even more importantly the recognition that GDP growth is stated in 'nominal terms' - that is, it has two components being 'real growth' and 'inflationary growth'. At the heart of the matter is the long-term importance of the 'real growth' component of overall GDP growth.

Recently the World Bank, in the aftermath of a downgraded estimate of GDP growth by the Organization for Economic Co-operation and Development (OECD), is reported as having recently cuts its 2013 global growth forecast to 2.4%, and to only 1.3% in developed economies. The latter is likely to be less than what will be reported inflation - meaning that in real growth terms the World Bank likely is forecasting a decline in real growth in 2013 in the developed countries. This once again emphasizes the dependence on the developing countries for real economic growth - where the World Bank is now reported as forecasting 7.8% growth in Asia (net of Japan) in 2013.

Aside from the foregoing, an article this morning reports:

• consulting firm Accenture says the top 1,200 global companies need to find an incremental $5 trillion in growth each year to meet stock analysts' (read 'financial markets') expectations. That is a very large number, considering the global GDP was reported at approximately $70 trillion in 2011 (source Wikipedia). Further, that growth will have to largely come - or so it currently seems - from the developing countries where business ideologies and reporting systems arguably impute a higher level of investment risk than one would like to think to be the case in developed countries;

• an annual PwC survey found only 36% of more than 1,300 CEOs worldwide were 'very confident' of revenue growth for their respective firms in 2013, down from 40% one year ago. It would be helpful to know what percentages would be reported if that CEO statistic was disclosed by country. One has to believe the % would be lower than 36% in the developed countries, and higher than 36% in the developing countries;

• beyond 2013, consensus forecasts call for economic growth to pick up, where recovery is said "could be spurred by rapid growth in shale oil and gas supplies". As is increasingly being discussed in this Newsletter, I don't believe that is something to be 'taken to the bank'; and,

• mergers and acquisitions are said to one way for corporations to buy growth. But that is confusing. The question then has be 'growth in revenues, or growth in earnings?'. Acquisitions certainly tend to create growth in earnings as a result of post-acquisition synergies related to saving of cost duplications when two companies come together. In an ideal world, acquisitions also result in synergistic growth, but synergistic growth typically is not as certain as are synergistic cost savings. This means to me that while business mergers and acquisitions may create revenue growth, that is not a 'panacea happening'.

Without economic growth, and real economic growth at that, there can be no meaningful long-term economic recovery in the developed countries. Growth or lack thereof will have to be reflected in the financial markets over time. Currently, I continue to see a disconnect between where the financial markets are pricing things, and where I think they ought to be pricing things. In the simplest of terms this, of course, goes to whether currently the financial markets:

• are taking only a very short-term 'trading view' of things. I think they almost certainly are;

• are 'efficient', in the context of the 'efficient market theory' that simplistically theorizes that the financial markets are 'all knowing'. It is entirely possible that current financial markets are highly efficient in the context of 'immediately available news and information' and trading (pursuant to trading algorithm activity), but inefficient (or less caring) in the context of long-term outcomes and investment; and

• have both short-term and long-term economic and company specific likely outcomes properly 'priced in' - which is to some large degree a different way of stating the previous point.

I have not seen anyone else make the points set out in the commentary in quite the same way, or as simply. Those who participate in the current financial markets should think hard about them - as for that matter so should everyone else.

Jonas Prising, who heads Manpower's operations in the Americas and Southern Europe is quoted in the referenced article as saying "Uncertaintly is itself becoming more of a certainty". That, Mr. Prising, is a very astute mouthful.

Topical Reference: Davos bosses hunt $5 trillion new revenue in low-growth world, from Reuters, Ben Hirschler, January 23, 2013 - reading time 3 minutes, thinking time much longer.