Skip to main content

Economic markets are not decoupled.

The strong rallies seen in the emerging market stocks are becoz of the feeling of decoupled from tensions and crisis in US and EU. It is not so. But the die-hards have a hard time to believe the consumption growth is not going to take it to new highs. 
Somebody else also thinks so. Here is an excerpt from the report of Economic Intelligence on the issue

Strong growth in many emerging markets in early 2010 has drawn new supporters to the idea that emerging economies can now power ahead independently of the developed world. Certainly, domestic demand in leading emerging economies is booming, partially underpinning the global recovery. However, this owes much to fiscal stimulus and loose monetary conditions. A sustainable rebalancing of emerging-market growth away from exports to the developed world will only be achieved gradually. In the interim it seems premature to expect emerging markets to drive global economic growth after the impact of temporary factors fades

..It goes on to add..

The idea that emerging markets have "decoupled" from demand in the developed world, or can drive global economic growth in the absence of such demand, therefore remains questionable. Emerging markets have certainly increased their resilience, and are set to play a prominent role in supporting global growth in 2010. However, absent an improvement in final demand in advanced economies, it remains likely that growth both in emerging markets and in the global economy will slacken in 2011. If current rapid rates of growth in leading emerging markets persist in the near term, they are likely to reflect loose fiscal conditions rather than any structural shift to sustainable autonomous demand. This in turn suggests a high risk of busts when support is belatedly withdrawn
Labels:

Comments

Post a Comment

Popular posts from this blog

Cognitive rules of business presentations

In his recent book, Clear and to the Point, Kosslyn explained that the four rules of PowerPoint are: The Goldilocks Rule, The Rudolph Rule, The Rule of Four, and the Birds of a Feather Rule. Here's how they work. The Goldilocks Rule refers to presenting the "just right" amount of data. Never include more information than your audience needs in a visual image. As an example, Kosslyn showed two graphs of real estate prices over time. One included ten different numbers, one for each year. The other included two numbers: a peak price, and the current price. For the purposes of a presentation about today's prices relative to peak price, those numbers were the only ones necessary. The Rudolph Rule refers to simple ways you can make information stand out and guide your audience to important details -- the way Rudolph the reindeer's red nose stood out from the other reindeers' and led them. If you're presenting a piece of relevant data in a list, why not mak...
Post a Comment
Read more

Value of dollar - Part 1

A Simple Perspective Will Do The date is 2000-05-28. Don't you get tired of all the bad news bears reminding you of all these instabilities, excesses, and 'potential' tensions in the global economy? After all, hasn't it always been like that? Yes it has, but not in money it hasn't. Increasingly, investors find it harder to know where to put their savings. What about Government Bonds? Wrong. Their recent record of capital losses have wiped out your guaranteed yields, probably because the stock market keeps crowding them out, and this even in a strong dollar and low inflation environment. Furthermore, there is no reliable liquidity and potentially poor quality debt in the corporate sector. Foreign assets? Wrong. Most of the world's economies are riskier, have been under performing, and also, there is this thing called currency risk. Like how is the average person gonna cope with currency...
Post a Comment
Read more

Depreciation of British Pound 1900-2000

When the Bank of England was formed the powers to create money was finally transferred to private hands. The creation of Fed in US, was just a part of this cycle. Though it is a common knowledge US Dollar has depreciated nearly 100% since the creation of Federal Reserve, the same is the case of all the currencies across the globe. For example, below is the UK Parliament data that highlights the depreciating value of Pound.
2 comments
Read more