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Economic Outlook 2010 - International |
China's economy is booming, spurred on by
massive government spending to build
infrastructure. These projects increase
productivity and can lead to further growth.
India is proceeding on the same path, but at
a slower pace. The growth in these
economies is fueling rising demand for basic
materials. More importantly, much of the
growth in emerging economies is being
recycled into growing internal demand,
which creates a more sustainable economy.
Concerns over heavy exposure to Eastern
Europe's debt will haunt the major economies
of Western Europe. The emerging
economies in Latin American and Asia are
not restrained by the growing red tape and
rising taxes imminent in the United States.
This sets them up to outperform both the
U.S. and Europe.
Markets in Australia and Taiwan, among
others, have risen rapidly and are now quite
expensive from a relative and historical
perspective. This makes them vulnerable.
However, markets in Peru, China, Chile and
India are still attractive. Asian economies
such as Indonesia and South Korea are also
appealing as internal demand grows and
China's appetite for their resources and
products remains high.
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| Positives |
Negatives |
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China and India continue to expand |
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Some central banks tightening |
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Low interest rates encourage growth |
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Select markets very expensive: Taiwan, Australia, Brazil |
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Foreign investments are attractive |
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Eastern Europe, Middle East have too much debt |
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Exports of basic materials remain strong |
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Weak dollar raises concerns over Dutch Disease |
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