Emerging Markets

Economies are shaped by a wide array of factors. War, poverty, politics, natural disasters and many other things are all very common issues. These factors have the power to make or break economies. One issue that is often overlooked though are emerging markets and their impact on the business world far and wide. What are emerging markets? Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. China and India are currently the largest countries with emerging markets and are both fast becoming the driver of global growth. Other countries with emerging markets include Brazil, Egypt, Mexico, Poland, Russia and countless others. These countries are all on the brink of potential success with the rise of emerging economies. Emerging markets have been debated about heavily from these recent years to when they first started to emerge. Many economy analysts believe that emerging markets are the way of the future and investing is the only way to go while others analysts believe that they don’t have what it takes to make the push into the limelight and that investing is not only a risky and more over costly mistake but a very foolish one at that. Each view comes with solid points but the most compelling arguments come from the pro emerging market standpoint. Emerging markets should be invested into due to the fact that they are expected to grow two or three times faster than developed nations like the U.S., they provide diversification and are resource drivers.

Emerging markets are expected to grow a whooping two or three times faster than developed nations, according to the International Monetary Fund. This means that these countries will surpass not only the United States, probably all other developed countries. “Around 70% of world growth over the next few years will come from emerging markets, with Chinas and India accounting for 40% of that growth.” (Forbes) This is absolutely huge. If what is predicted is to come true, emerging markets are going to be running the world. The international monetary fund forecasts the total GDP of emerging markets could possibly overtake that of developed economies in 2014. In terms of purchasing power, China is expected to surpass that of the United States in 2016. Emerging markets are also extremely well balanced. Remember who bailed us out of the United States economic crisis not too long ago, China. The balance of payments of emerging markets look a lot better than advanced economies. China will have a current account surplus of over $450 billion into 2016, according to IMF. (Forbes) Russia won’t fall too far behind with a surplus of $86 billion. (Forbes) To put it into perspective, the United States is likely to have an account deficit of $643 billion in 2016, according to IMF.

Emerging markets provide wonderful diversification. Emerging markets tend to perform differently than developed markets. They have made a knack for them selves