Economic Growth Will Be Evident in Emerging Nations; EMERGING MARKETS

The Birmingham Post (England), January 29, 2009 | Go to article overview
Save to active project

Economic Growth Will Be Evident in Emerging Nations; EMERGING MARKETS

Byline: ALUN THORNE Head of Business

The lion's share of global economic growth in the coming year will take place in emerging markets although their growth will slow, and the recovery of developed economies will ultimately drive global economic growth in the future.

According to the Deloitte Touche Tohmatsu Global Economic Outlook report for the first quarter of 2009, the current recession will be a setback for emerging markets globally but emerging markets will continue to have productive potential and unmet need for investment.

"The principal problem is confidence; in banks to lend, and in investors to tolerate risk," said Ira Kalish, director of Global Economics at Deloitte Touche Tohmatsu. "That is why we see and will continue to see unprecedented government intervention during this crisis."

The report suggests a third wave is looming as new bank write-downs loom due to credit card defaults gaining in the US. In addition, global trade is at risk due to the credit crisis. Also, commodity exporting countries face new problems due to the collapse of commodity prices.

"Since our last quarterly report, the global economy has stabilised somewhat - albeit at a low and declining level," he added. "Still, although there are no longer daily shocks, there are shocking things happening."

Across emerging markets credit availability, currency movements and commodity prices are affecting growth. Frozen credit markets and plummeting currencies have led to a landslide of risk downgrades of former "growth champions" such as India, and Argentina. In Frontier economies where the standard of living had begun to rise, the crisis has cut off needed capital, thereby slowing growth considerably.

However, in the long run companies will likely continue to find attractive opportunities in emerging nations, even if growth there slows temporarily.

Through reformand strengthened legal, regulatory, and infrastructure development, developing markets could heighten their appeal for foreign investors.

The boom times for emerging market countries helped cover up underlying structural problems and delay necessary reforms globally, providing opportunity for new growth paths. Emerging and Frontier markets can become even more attractive investment targets by grasping the opportunity for reformand fiscal stimulus through infrastructure and social investment.

As for the rest of the world, governments are takingunprecedented actions to spur short-term recovery, and policymakers hope it may make a longer-term contribution to economicwell-being.

Mr. Kalish added: "As a result, the longer term outlook for the economy is more promising as addressing the crisis of confidence is much needed. As was the case in the early 20th century, productive capacity has not been diminished, no physical or human capital has been destroyed, and our potential to increase living standards throughinnovation and new technology remains as great as ever.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Economic Growth Will Be Evident in Emerging Nations; EMERGING MARKETS


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?