There’s no doubt about it: the global economic recovery is happening. However, every region is recovering at its own pace, which means investors could see some uneven moves in the months to come. The varying levels of recovery should play out in exchange traded funds (ETFs), too.
World Economy Watch breaks down the world’s regions and susses out who will be the recovery’s leaders while we provide some ETFs you can consider to play along:
- North America: Economists expect real GDP in the USA to grow by 1.5% in 2010, while the Organization for Economic Cooperation and Development (OECD) is a little more optimistic, estimating growth to be around 2.5% this year. Canadian economists have predicted growth of 2.7% in 2010, while the IMF expects a weaker recovery of 2.1% growth. SPDRs (NYSEArca: SPY)
- Latin America: Commodity-exporting countries such as Brazil, Chile, Colombia, Mexico and Peru should perform better than the region as a whole, while commodity importers face slower recoveries. In 2009, the combined GDP of Latin American countries contracted by 2.9% although conditions in the region’s larger economies began to stabilize in the second half of the year. iShares S&P Latin America Index (NYSEArca: ILF) [How to Overcome Latin America’s Risks.]
- Western Europe: Europe’s recovery depends on temporary factors such as inventory adjustment and the effects of stimulus packages that will dissipate over the medium term. Modest growth of around 0.5% is forecast for 2010, although in a few countries – notably Ireland, Greece, Portugal and Spain – the recession could continue. Vanguard Europe Pacific ETF (NYSEArca: VEA)
- Eastern/Central Europe: Real GDP of Central and Eastern Europe fell by 5.0% in 2009 and the IMF predicts growth of 1.8% in 2010. If this comes to pass, the numbers would be well below historical trends, though for most countries the recession will have ended. The Baltic States are a notable exception. In Latvia and Lithuania, real GDP is forecast to fall by 4% in 2010 while Estonia may see a decline of 2.6%. iShares MSCI Emerging Markets Eastern Europe (NYSEArca: ESR)
- Asia Pacific: The IMF predicts growth of 7.3% for the developing countries of Asia in 2010. Among Asia’s industrialized countries, Japan should see growth of 1.7% in 2010 after a decline of more than 5% the previous year. Australia and New Zealand should manage growth of around 2%. Vanguard Pacific (NYSEArca: VPL) [Commodities Lift Australia.]
- Africa/ Middle East: Among oil exporters in the Middle East and North Africa, the IMF predicts growth of 4.1% in 2010. The prognosis for oil importers in sub-Saharan Africa is not quite as bright, although these countries can look forward to growth of 3.3% in 2010. SPDR S&P Emerging Middle East & Africa (NYSEArca: GAF)
For more stories about global ETFs, visit our global ETFs category.
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.