Brazil, Russia, India, China, South Africa. Are Emerging Markets Ripe for a New Crisis?

Dear Reader,


There have been many signals and forecasts that some big emerging markets are showing signs of crisis. Argentina, Turkey and Indonesia are a case in point.

Many tie these recent developments with the Federal Reserve raising rates and the US dollar appreciating. Analysts see similarities with the Asian Crisis in 1997. Will emerging markets suffer a new deep crisis?

In my opinion, No. Why? Because emerging markets now are much more resilient than in the past. Their economies make up more than 34% of global GDP. What I think will happen, however, is that certain individual economies will suffer economic crises. I forecast China will suffer a severe recession due to its economy being overburdened by debt. Taking on more and more debt to finance growth is simply unsustainable. Russia, India and Brazil, on the other hand, should develop quite fast and well. India is, according to me, the next Asian tiger. And Africa is the next investment frontier. The return on investment in Africa is and is going to remain in the midterm phenomenal. Eastern Europe, although not that big, is growing strongly and healthily.

So, basically I believe as a whole Emerging Markets will continue to exhibit growth rathes much faster than the developed world and increase their share of the global GDP. Economic setbacks, here and there though are possible, likely and simply going to happen.


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Kind regards,
Petar Posledovich