Emerging Markets at the Tilting Point

For the past decade or so Emerging Markets have gained in popularity as the economic effects of globalization spreads and sets roots. Nobody voted for it but it is a natural evolution of what economists call “rent seeking”-looking for profits. Some might make the case that if the vast population of our species wasn’t able to participate in the miracle of the Industrial revolution there would eventually be another kind of revolution. It wasn’t diplomacy or a feeling of being brothers keeper that feeds the power behind developing new markets with tremendous pent up demand.

Of course it takes time to build up the infrastructure and more importantly the belief that citizens of what was termed the underdeveloped countries might actually have a chance to improve their lot. But apparently the foundation has been set and it appears that the Emerging Markets might be approaching some sort of tilting point.

Until today, the old saying was “when the U.S. gets a cold, the third world gets pneumonia”. However, things may have changed. Recent forecasts have the Emerging Markets outperforming the established economies of the U.S., Europe and Asia for 2008 despite the forecast recession that may already be upon the U.S.

By Emerging Markets most think of the BRIC countries (Brazil, Russia, India and China) but that elite club has expanded to become the New 11 or N-11.

Country Population (millions) 5 year avg growth
Brazil 186 5.6
China 1,306 9.4
India 1,080 6.2
Indonesia 242 4.8
Vietnam 84 7.4
Korea 49 5.2
Mexico 106 2.7
Turkey 70 5.6
Pakistan 162 5.0
Russia 143 6.8
Phillipines 88 4.7

If the Emerging Markets outperform the Industrial countries in bad times, they will also do well in the good times. So, particularly if you are a younger investor, take a look at the Emerging Markets and realize that they have arrived.

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