The following things come to mind when thinking of Western countries: debt, old, not as innovative as emerging markets. Emerging markets are mostly described or thought of as new, fast growing, innovative, high saving etc. The question comes to mind if the West will rule in the future or will the East/other countries take that role.
When considering the trends of emerging markets from 15 years ago, it is clear that these countries experienced a very bad period after the Thailand financial crisis in 1997. After this financial crisis emerging markets had an up rise in 2003 to the extend where China grew at double digits, India at 8% and Brazil achieved a current account surplus at this stage according to The Economist.
It was clear that emerging markets came back with a bang and was here to stay.
Sadly after this glorious period these emerging markets began to experience some trouble. In 2010 it Brazil’s economy was expected to grow at 4%, but now the forecast is only 2.5%. Further a recent study done by the World Bank indicates that China has to make various economic reforms as their economic growth will decline in the next 20 years if reform doesn’t take place. India’s economy has also taken a knock as a result of policy uncertainties, fiscal deficit and inflation according to the World Bank.
Suddenly the current forecast is that if the East/ emerging markets don’t do what’s necessary, like economic reform, the West might keep on ruling.
Considering the West: According to the Economist, few people expect America to be a poorer country over 20 years. Instead it is expected that America will recover from the financial crisis and unemployment will decrease. The United States of America is expected to recover. http://www.economist.com/node/21558576 But if the West doesn’t step up and try growing at a quicker or at least consistent rate too keep up with emerging markets they will quickly be given the boot as the leading economies.
Although emerging economies are growing rapidly, the previous financial crises regarding these countries should not be forgotten too soon. Finally, although emerging markets’ growth is declining and might not ever be as high as in 2003, there is margin for error as by 2010 the combined dollar GDP of BRICS was 75% higher that initially forecasted for that time. The conclusion that can be made is that according to economic trends where emerging markets’ growth is declining while Western countries might be on the up rise, the countries will catch up with each other rather than a definite ruler stepping forward.
Super Sonic Surge