São Paulo – The economies of emerging nations may exceed those of developed nations, in purchasing power parity by 2014. This is one of the conclusions of the Ernst & Young Globalization Report, disclosed on Tuesday (23) by the international consultancy company. “About 70% of total world growth in the next few years [should come] from the emerging markets, of which over half will be from China and India,” shows the study.
The report also includes a ranking of the 60 main economies of the world, based on the level of globalisation of these nations. The figures considered include the Gross Domestic Product (GDP) of these nations and the results of research with high-level executives from several parts of the world.
Brazil is in 47th place, having dropped one position as against the previous study. Saudi Arabia is in 35th place, but was previously in 32nd. Egypt and Algeria remained in the same positions as they were in 2010 and 2011, in the 45th and 59th positions, respectively. In both studies, the table is led by Hong Kong.
The index measures the performance of economies in 20 indices in five categories: openness of trade, capital movement, exchange of technology and ideas, labour market movement and cultural integration. The factors were weighted according to how important they were considered by 992 senior executives who operate in international trade.
The study shows that over half of those interviewed consider multinational investment in fast growing markets need longer-term horizons, and almost half state that the cost to face these markets are much greater than they expected.
“A number of factors contribute to the “squeeze” on the ability of multinationals to extract value from rapid-growth markets. The first is increased competition. Multinationals entering China, India or Brazil must compete against other global firms who all see rapid-growth markets as their future. They also face increasingly stiff competition from local companies,” points out the report.
According to the study, almost two thirds of these executives consider it probable for there to be a financial crisis caused by debt in the Euro Zone. “Nearly half of the respondents think that China could suffer a major economic slowdown over the next five years, and one-third expect a similar outcome for Brazil and India,” points out the report.
In the study, Simon Evenett, a Development and Trade and International Economics professor at St. Gallen University, in Switzerland, alerts to maters of protectionism in some countries.
“Measures that have been put in place to stimulate the economy have also had unintended protectionist consequences. US quantitative easing, for example, has provided a cover for a lot of countries to react, both in terms of international finance policy as well as trade policy. Countries such as Brazil and India very quickly made the connection between quantitative easing and the appreciation of their own currencies,” adds the specialist.
*Translated by Mark Ament
