Emerging-market ETFs Help Balance Global Economy

Emerging-market countries, such as India and China, have experienced rapid economic growth that is reflected in the strong performance of their exchange traded funds (ETFs). Currently, iShares FTSE/Xinhua China 25 Index (FXI) is up 70.0% year-to-date, and India’s closed-end fund (CEF), iPath MSCI India Index (INP), is up 44.4% year-to-date. However, it’s not just India and China that benefit; the whole global economy receives a boost when countries prosper.

An article in the Economist says economists have reminded us for years that America couldn’t sustain its dominant economic position forever, and China is an excellent source to balance the power. In fact, for several years, emerging Asian economies have accounted for more of global gross domestic product (GDP) than America. In the first half of 2007, the increase in consumer spending (in actual terms) in China and India together contributed more to global GDP growth than America’s increase did. Emerging markets as a whole will account for more than 50% of world GDP growth in 2007 and fully 30% of total world GDP. In addition, emerging market countries represent 85% of the world’s population, says Carl Delfeld for ETF XRAY. The economy truly has become global as developed and emerging markets contribute to keep the wheels turning.