"What we are seeing is a series of significant doubts about the economic future of the rich industrial countries, compared with the continued rapid growth and successful economic performance of many of the emerging markets." Dr. C. Fred Bergsten
The era of dominance by the developed OECD countries is drawing to a close. The fast-growth markets of Asia, Africa and Latin America are becoming the engines of the global economy.
Implications for business
How can your company prepare for growth in one market to another?
- Ensure that enough long-term funding is available to weather any potential weakening of credit conditions.
- Play an active role in creating demand even in the face of a potential downturn in the developed economies.
- Dial back expectations of quick rewards from a huge emerging middle class, but invest now to capture future market share.
- Expect slowdowns in growth along the way. Be prepared to ride out volatility and be willing to invest for the long term.
- Update risk assessments of fast-growth markets, focusing on the intensely competitive landscape.
Landmarks in the shifting landscape
When you're preparing your company for shifting growth markets using the points above, it's important to keep your eyes open to the ongoing changes affecting the markets.
Preparing for change isn't a one-time action. It's a fluid process.
Since our Global Growth Forum conference in June, a series of major events has further skewed the balance. From the European sovereign debt crisis to the first-ever downgrade of US debt by a major rating agency, big changes have occurred.
Emerging and developed markets' share of global GDP
According to the IMF, by 2014 emerging markets will have overtaken developed economies in terms of share of global GDP.
These shifts include:
- A darkening outlook for developed markets
- The overturning of long-held perceptions of risk
- A major reallocation of global financial assets from West to East
- Fast-growth markets' shift to consumption-driven growth
- The changing role of government
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