Hello 2013

Mark MobiusThe last in our series of posts by outside commentators on prospects for emerging markets in 2013 is by Mark Mobius of Templeton Emerging Markets

On my most recent trip to Egypt in early December, I arrived in Cairo a few days after President Mohamed Morsi announced that he was assuming dictatorial powers over the writing of the new Egyptian constitution.

However, during our company visits, we found that, surprisingly, it was business as usual in Egypt. Continue reading »

The 12th in our series of guest posts on emerging markets in 2013 is by Deepak Lal of UCLA

India’s recent economic growth collapse is reminiscent of many similar declines seen in other countries*.

Whilst the proximate causes were severe macro-economic imbalances, the deeper causes were numerous micro-economic distortions and unsustainable politically-motivated fiscal expenditures. Bad policy has been the basic reason for these collapses.

But, the Indian growth collapse poses the puzzle: why have the economic reformers who initiated the economic liberalisation of 1991, and who have been in charge since 2004, allowed such bad policies to undermine their legacy? Continue reading »

Shujie YaoBy Shujie Yao of Nottingham University

In less than two months since the 18th Congress of the Chinese Communist Party (CCP), China has investigated five big cases of corruption involving high-level political leaders in Chongqing, Guangdong and Sichuan.

But simply launching investigations won’t be enough. China’s leaders must also reform their political, economic and social systems to root out the causes of corruption. Continue reading »

The tenth in our series of guest posts on the outlook for the year ahead is by Douglas Beal of Boston Consulting Group

What is the best way to measure a nation’s economic progress? For many decades, most of us have tended to focus on one benchmark: gross domestic product (GDP), which measures national income. There’s no question that income growth is central to economic development. But it has become just as clear that GDP per capita alone is not a sufficient measure of progress. Continue reading »

The ninth in our series of guest posts on the outlook for 2013 is by Robert Abad of Western Asset Management

In a year of headline-induced market volatility, driven by the ebb and flow of risks across the world’s major global markets, emerging market debt closed the year as the best-performing asset class in the world.

This was a remarkable, yet unsurprising development. As it became increasingly clear that global central banks were committed to keeping interest rates low, increased investor demand for higher-yielding emerging markets (EM) assets pushed record levels of capital into EM debt.

As we look ahead, this trend should continue in 2013. A key beneficiary will be emerging markets’ high yield – a rapidly-developing EM segment that includes high-yield corporate borrowers as well as lower-rated sovereigns and frontier markets. Continue reading »

The eighth in our series of guest posts on the outlook for 2013 is by Bhanu Baweja of UBS

From politics in the US to economics in the developing world, changing demographics will be one of the most powerful forces shaping the future. We can predict with reasonable certainty how the numbers in an overall population, and the various sub groups within it, will change in the coming decades.

It is more difficult to predict the exact configuration these changes will mould society into. That all emerging markets will obtain a demographic dividend is not a given. One ought to be worried by the lazy optimism on this issue. Continue reading »

The seventh in our series of guest posts on the outlook for 2013 is by Sergey Aleksashenko of Moscow’s Higher School of Economics

President Vladimir Putin has for more than a decade run the Russian economy through a combination of resurgent state power and crony capitalism.

Driven by higher oil prices, GDP has recovered rapidly since he first took power in 2000, but economic growth has come at a high price. As the state has become stronger in the economy, the institutional framework has become weaker: trust in the courts has plunged, bureaucratic corruption has mushroomed and officials have taken to milking money even from small companies.

Buoyed by his return to the Kremlin in 2012, Putin has now pledged to improve the business climate. But can a leopard change his spots? Continue reading »

The sixth in our series of guest posts on the outlook for 2013 is by Morgan Harting of AllianceBernstein

For two years, emerging markets companies have delivered inferior earnings growth and investment returns compared to peers in sluggish developed market economies. Now, the consensus is that earnings growth will catapult from near-zero in 2012 to 13 per cent in 2013. Hopes were high at the end of 2010 and 2011, too, yet analysts were then forced to revise down their earnings estimates. Will 2013 represent another triumph of hope over experience? Continue reading »

Zdjecie RybinskiThe fifth in our series of guest posts on the outlook for 2013 is by Krzysztof Rybinski of Vistula University

What will the deepening crisis in the eurozone in 2013 mean for the Central and Eastern Europe? I expect the eurozone crisis to intensify next year, so it will be a very tough year for the eurozone and for the Central and Eastern Europe (CEE). Continue reading »

Michael PettisThe fourth in our series of guest posts on the outlook for 2013 is by Michael Pettis of Peking University

Beijing’s new leaders have clearly signaled their intention to rebalance China’s economy away from investment and towards more consumption but this won’t be easy. It will require a reversal of the process by which, over the past three decades and especially the last decade, economic growth has disproportionately benefited the state sector at the expense of Chinese households. Continue reading »

The third in our series of guest posts on the outlook for the new year is by Andy Xie

China has enjoyed a decade of rapid growth because it reformed to join the WTO and invested in infrastructure. Foreign investment poured in and made China the largest export economy in the world. As money kept rolling in with exports and foreign investment, the system went off the track and made bubbles to subsidize investment and enrich the establishment on the side. Now the export machine is stagnating and the foreign investment tide receding. The costs from the inefficient bubble activities are exposed and holding back growth. To move the economy forward, China needs to reform again to cut out the deadweight losses from the system’s inefficiencies. Unfortunately, as in the past, the reform zeal is still rhetorical. Continue reading »

The second in our series of guest posts on the outlook for 2013 is by Mohamed El-Erian of Pimco

In the 30 years that I have worked on and with developing countries, I have witnessed an amazing change in how conventional wisdom characterizes their economic relationship with the advanced world. And while conventional wisdom has not always kept pace with changes among this group of nations, it inevitably ended up in the right zip code.

Today, the situation is more complicated due to the fluidity of the global economy. Continue reading »

Today beyondbrics begins a series of posts by outside commentators on the outlook for emerging markets in 2013. Our first contribution is by Geoffrey Dennis of Citigroup

The biggest surprise in emerging markets this year has, in our view, been much weaker growth than originally forecast in several large economies. In summer-2011, Citi economists expected average GDP growth for 2012 of over 6 per cent in emerging markets; the actual outturn looks as if it will be around 4.5 per cent – a big miss. Continue reading »