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Emerging markets drive global growth as developed countries slow

According to a new report, an upbeat picture for the global economy rests largely on exceptionally strong growth in some of the world's more exotic markets, as some of the key developed economies falter...

According to '2007: country by country', just published by the Economist Intelligence Unit (EIU), an upbeat picture for the global economy overall rests largely on exceptionally strong growth in some of the world's more exotic markets.  Booming demand in China and India will also play a key role in offsetting a less exciting performance in developed economies such as the US, Japan and Germany.

There are, nevertheless, number of threats that could drag down global economic performance, some stemming from the risk of a sharp correction in the US, others from an uncertain political outlook in many countries:

• The US housing market has already softened, but a sharper than expected fall in property prices during 2007 would threaten to push the economy into recession
• There are still risks associated with the Chinese government’s attempts to slow the economy and deal with an investment bubble, especially in the run up to the 17th Party Congress in October 2007
• Geopolitical risk looms large, with worries about Iran's nuclear ambitions helping drive up oil prices, tensions rising over North Korea's nuclear brinkmanship and the ongoing terrorist threat

The EIU underlines in particular the serious threat that nuclear programmes in North Korea and Iran pose to regional political stability and to the world economy more generally.

2007: country by country

2007: country by country, the well-established annual forecasting guide from the Economist Intelligence Unit, covers almost 200 countries, each with a concise assessment of the political and economic prospects for the year ahead, together with key economic indicators and a summary of forecast numbers.

Highlights in the 2007 edition include:

• US politics will be characterised by both compromise and gridlock, as the Democrat Congress seeks to advance its policy agenda in the face of a republican administration
• A turn to the left in Latin America will lead governments to resort increasingly to populist policies, and risks alienating foreign investors
• Natural resource dependence in the Commonwealth of Independent States (CIS) will constrain broad-based growth, as foreign-exchange inflows strengthen real exchange rates and lead to complacency on structural reform
• Overvalued housing markets in some key EU economies, notably Spain and the UK, are a potential threat to our relatively benign outlook for the region
• 17 countries in Sub-Saharan Africa face elections, opening up a window of opportunity in the continent for progress on democratic accountability
• Political risk in the Middle East will escalate, as Iraq remains ungovernable and Iran is undeterred on pursuing its nuclear programme

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World Growth League Table 2007
Real GDP Growth (%)
10 fastest growing countries		10 slowest growing countries
Azerbaijan	18.0	Zimbabwe	-2.7
Sudan	11.8	Iceland	0.6
Angola	10.3	Italy	1.2
Mauritania	10.3	Cote d’Ivoire	1.4
Liberia	10.0	Germany	1.4
Kazakhston	9.7	Portugal	1.4
China	9.6	Seychelles	1.5
Armenia	9.0	Swaziland	1.5
Estonia	8.9	France	1.8
United Arab Emirates	8.5	Malta	1.8
SOURCE: Economist Intelligence Unit

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