Rapid-Growth Markets Forecast: July 2012

Although recession, stalling growth and high unemployment continue to impact many markets, the data and insights in this quarter’s Rapid-Growth Markets forecast tells us that the overall prospects for RGMs remain strong.

Our analysis suggests that RGMs are likely to weather the ongoing Eurozone crisis and remain engines of global growth, though many will see expansion slow this year. Their expansion is expected to accelerate once more in 2013, helping stimulate a wider pick-up.

And as uncertainty surrounding the single currency diminishes — for we still believe a Eurozone break-up is unlikely — we expect growth to move forward from 4.9% in 2012 to 5.9% in 2013 and 6.5% in 2014.

What lies behind such positive projections?

First the rapidly growing Asian countries are playing an increasingly powerful role on the global scene. By adjusting their growth patterns towards more reliance, the major emerging Asian economies would allow greater exchange rate flexibility.

Meanwhile, the US and other advanced economies should reduce internal demand relative to overall growth. This shift in relative demand and prices between surplus and deficit countries will help stabilizing financial markets and economic systems across the world.

Secondly, we believe that soaring domestic demand in the RGMs is poised to change the rules of the world economy. By 2020, the number of middle-class households in emerging countries will more than double, overtaking the US and Eurozone with nearly 150 million new consumers.

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