Emerging markets and related exchange traded funds (ETFs) are becoming rather robust. So much so, in fact, that a time may soon come when emerging markets begin to purchase more stuff from developed countries and in turn support developed economies.
The impressive growth of emerging market countries is confirming the theory of decoupling, which holds that such countries are beginning forge a path of their own without the aid of developed nations, writes Michael Brush for MSN Money.
A few more stats that support the case:
- Cristina Panait at investment firm Payden & Rygel has calculated that developing economies made up 45% of world GDP last year, compared to 37% in 2000.
- Emerging countries are beginning to consume more with their newfound wealth – around 35% of $1.3 trillion in U.S. exports went to emerging market consumers in 2008.
- These purchases could help “nudge” the United States back to growth of 3% to 3.5% a year sooner than most people anticipate, says one economist.
- Increases in the emerging markets may also appreciate emerging currencies. Healthy economic growth in emerging markets will attract foreign investment, which would drive up demand for their currencies.
- Emerging market companies are beginning to rise onto the worldwide stage with global name brands in the technology sector, auto industry, banking and telecommunication services.
- The International Monetary Fund estimates emerging markets will grow 4.7% next year.
- iShares MSCI Emerging Markets Index (EEM): up 45.4% year-to-date
- Vanguard Emerging Markets Stock ETF (VWO): up 51.4% year-to-date
For more information on emerging market countries, visit our emerging markets category.
For full disclosure, Tom Lydon’s clients own shares of EEM.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.