There are many important events to remember in 2010, first that is European debt crisis, deteriorating economic condition of the U.S. and advance footsteps of Emerging countries. Let first see the result of different countries in year 2010 –
GDP of some Developed countries like
Japan and decreased in Q-2. Where their European counterparts have increased GDP growth rate in that time frame. Where the picture is opposite in Q-3, may be due 2nd round of economic problem that U.S. Europe is facing this year.
Now let see the GDP growth rate of some Emerging nations.
Now let compare charts of different countries.
GDP growth rate of Emerging nations are far ahead than Developed nations. Though Brazil is little bit disappointing comparing to their stock market boom, but country like Brazil and Indonesia don’t have big GDP figures in past too. But comparing to 2007-08 figures
is lagging in 2009-2010. Where as Russia India and is far ahead among all other countries. China
Now let look at the 10 year Govt. Bond yields of different countries.
Deteriorating economic conditions of Euro countries are showing in their increasing Bond yield value. If in
Europe we consider German 10 year Bond yield as benchmark then we can see the difference with these countries. Where some of the Emerging countries like India and have traditionally high bond yields, so that is not a concern. Brazil
Despite so many developments Emerging economies cannot left their true character of high interest rate, which in many cases hampering the growth.
Outlook for 2011
I cannot see much of a growth story in 2011. Some experts expect economic expansion of 3.1 per cent in 2011. Growth rate of Euro areas are better in 2010 than 2009. GDP Growth in the Euro area is forecasted to 1.3% - 1.8% per cent in 2011.
United States growth is expected to be 2.2%-3.1% in 2011. For Germany it is 1.7% and around 2.5%. In U.K. growth is expected to be around 2%. Growth for Emerging nations is expected to be around 6.4%, especially some of Emerging Asian countries are expected to show more discipline. Growth of Japan China is expected around 9.9%, for India 8.4% where their counterparts Brazil 4.1%, Mexico 4.5% and around 3.3% for the year 2011. Russia
Advance countries are going to face fiscal problem in 2011, where private demands are not increasing much in 2010 though some data are yet to come but this may be the first impression about them. In spite of low interest rate economic activities are not encouraging much. People are not spending much. Now it is time to look how those new economic stimulus works. On the other hand banks are still closing their business, in 2010 more than 150 banks failed in
It will be very interesting to see what happens in 2011. U.S.
On the other hand Emerging nations will face the problem related to much capital inflow, currency appreciation and as a result asset bubble and inflation and related interest rate hike e.t.c. Some countries dependency on domestic demand will increase and some may concentrate from export to domestic demand.
Inflation and export markets are two big matters those are going to decide the future. Inflow of moneys seeking for a higher return than treasury will create more problems. It will be very interesting to see if Chinese economy crosses
for the 2nd spot. Japan
In 2011 we are going to see world’s biggies are concentrating hard on African countries may be due to natural resources, like many countries are looking on Afghanistan. Countries with natural resource are going to get lot of importance in future. We also can see use of weapons called Sovereign debt default and use of Rating down grade when and where it is needed. I hate this rating agencies, some time I think UNO should set up a Rating Agency, whose sole purpose will be related to rating of different countries and their Govt. Bonds. Frankly it will be not good choice to leave this job to a private one , perhaps we know why ?
It is hard to say whether BRICSA countries are going to contribute more in world economy or whether they are going to challenge the G-7 countries, or there will not be any G-7. But it is sure balance is shifting and it is shifting very fast. MAY BE IT IS THE NEED OF THE TIME.
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