"What's different today about emerging markets compared to ten years ago?""Today they're emerging."
Chuckle for a minute. Then think about it. It's a very telling statement*.
The term 'emerging markets' was coined thirty years ago by Antoine van Agtmael, to replace the perjorative terms previously used for the less developed world. These economies represented one third of global GDP thirty years ago, but now they make up more than half. More importantly, they accounted for more than four fifths of global GDP growth over the last five years. Finally those countries are, well, emerging.
The Economist has just published an interesting article about emerging markets, assessing the common concern that their economies are overheating.
They chose six different indicators that might indicate overheating of an economy - inflation rate, average GDP growth rate since 2007, labour markets, credit expansion, real interest rates, and external current account balance - and concluded that the likeliest worst danger lies not in oft-discussed China, but in Argentina.
There is a depressingly long list of countries where something could go wrong. And with the world so intertwined, and with emerging economies accounting for most of global growth these days, it's not a pretty picture.
Interesting analysis. This post is a departure from my normal topics, but perhaps others will find this interesting too.
* I read this exchange recently but can't remember where, so pardon the lack of attribution.