Rapid-Growth Markets Forecast: Winter 2013
As we turn the page on 2012, the world's rapid-growth markets (RGMs) will continue to be pivotal to the hopes for sustainable recovery.
The more trade-oriented RGMs, especially those in Asia and Latin America, are now becoming the locomotives of a global recovery.
Back on track
Business and political leaders alike may exhale a sigh of relief. The slowdown of RGMs during 2012 seems certain to be merely a stumble from which they are now recovering.
We expect the pace of global growth, on the basis of purchasing power parity (PPP), to accelerate from 3.0% in 2012 to 3.5% in 2013 and then 4.2% in 2014. The initial phase of this acceleration will be driven by the RGMs rather than the major advanced economies.
In Q4 2012, encouraging signs started to emerge that the more trade-orientated RGMs, particularly those in Asia and Latin America, were regaining momentum due to a combination of an improvement in intra-RGM trade and the impact of steps taken earlier in 2012 to ease monetary and fiscal policy.
This process is expected to continue over the next couple of years. Though, just as the pattern of global growth will be uneven, emerging regions will expand at different paces.
Growth in the Asian RGMs will accelerate from 6.3% in 2012 to 7.8% in 2014. Growth in the Latin American RGMs is forecast to rise from 2.6% in 2012 to 4.8% in 2014.
In contrast, growth in the Middle Eastern RGMs is expected to slow a little as tensions in the region moderate, allowing oil prices to fall. The weakness of the Eurozone economy will limit the pace of recovery in the eastern European RGMs.
Overall we expect RGM growth to accelerate from 4.7% in 2012 to 5.4% in 2013 and then 6.4% in 2014.
As RGMs, led by China, become the locomotives of global growth, this will be the nexus of RGM success.
G7 and emerging markets: GDP growth
Source: Oxford Economics.