Emerging and Developing Economies Economic Forecast

While emerging and developing economies promise the most growth compared to more advanced economies, its potential is often accompanied by higher risks and greater uncertainty. At an individual level, this uncertainty is higher in countries with volatile social and political environments. However, a global and all-encompassing view of emerging and developing economies indicates rapid economic growth and better investment opportunities, owing to larger markets such as China and India.

While emerging and developing economies promise the most growth compared to more advanced economies, its potential is often accompanied by higher risks and greater uncertainty. At an individual level, this uncertainty is higher in countries with volatile social and political environments. However, a global and all-encompassing view of emerging and developing economies indicates rapid economic growth and better investment opportunities, owing to larger markets such as China and India.

According to the IMF, emerging economies, particularly those in Asia, were primarily responsible for the global recovery from the recent financial crisis. Emerging and developing nations are also expected to drive future global economic growth and attract the greatest amount of investment.

In addition, greater domestic consumer consumption within emerging and developing regions boost global economic numbers, particularly those in the agriculture and industry sectors. While most emerging and developing economies are expected to experience rapid growth, growth rates are expected to stabilise in the next 5 years as these economies eventually progress to catch up with the established markets.

The IMF has also warned that while most indicators currently point to robust growth in emerging and developing economies, there have been signs of overheating in some of these economies. An upcoming challenge for emerging and developing economies is how maintain their economic growth while keeping overheating pressures in check.

Emerging and Developing Economies’ GDP Forecast

The GDP (PPP) for emerging and developing economies in 2010 was US$35.2576 trillion. This was a 7.99 percent increase compared to 2009 and gave emerging and developing economies a 47.139 percent share of the world’s total GDP (PPP).

By 2013, the GDP (PPP) for emerging and developing economies is expected to account for more than half of the world’s total share, eventually reaching 52.137 percent of the world’s total GDP (PPP) by 2015. GDP (PPP) annual growth rates between 2011 to 2015 would also gradually increase from 7.77 percent in 2011 to 8.54 percent in 2015. The total GDP (PPP) for emerging and developing economies in 2015 is expected to be US$52.174 trillion.

The average GDP (PPP) per capita in emerging and developing economies is also expected to follow a rising trend. While the average GDP (PPP) per capita for 2010 was US$6,082, this number is expected to grow to US$8,456.51 by 2015. This would come after a mean annual growth of 6.814 percent over five years.

Emerging and Developing Economies’ Unemployment Forecast

There is no data for average unemployment in emerging and developing economies, however it is possible to derive some conjectures based on analysing the unemployment rates of individual countries within the group. At the top of the world’s emerging and developing economies is China. In 2010, its unemployment rate was 4.1 percent of the labour force, down from 4.30 percent in the previous year. For the following five years, China’s unemployment rate is not expected to see any drastic changes and be stabilised at 4 percent.

On the other hand, an emerging economy such as South Africa has an unemployment rate of 24.8 percent. Social and political factors such as poor infrastructure and internal conflicts may contribute to a higher unemployment rate. However just like most emerging and developing economies, South Africa’s unemployment rate is expected to see gradual improvements and will drop to 22.7 percent by 2015.

While unemployment rates may vary among the emerging and developing economies, most economies are expected to see an improvement in their unemployment. EconomyWatch compared the unemployment rates of 70 emerging and developing economies in 2010 to the forecasted rate in 2015 and discovered that while the mean unemployment rate for 2010 was 9.733 percent and the median unemployment rate was 8.159 percent, both numbers are expected to drop to 8.196 percent and 7.349 percent respectively by 2015.

Emerging and Developing Economies’ Inflation & Current Account Balance Forecast

A common problem emerging and developing economies face is controlling inflation rates. As the rate of returns for investors are often higher in emerging markets, most investors tend to place more money in emerging and developing economies. This money in turn inflates these economies, even as they attempt to control rising prices.

In 2010, the average inflation rate (average consumer price change) for emerging and developing economies was 6.25 percent. This represented a significant increase from 2009 where the average inflation rate was only 5.23 percent. A possible reason for such a rapid rise is the increased investor confidence in emerging and developing economies, particularly due to the global recovery from the financial crisis.

On the other hand 2011 is most likely to see average inflation rates drop back to 2009 levels. In 2011, the average inflation rate (average consumer price change) for emerging and developing economies is expected to be at 5.165 percent. Inflation rates are expected to fall annually for the following five years and be at 3.792 percent by 2015.

The total current account balance for emerging and developing economies will also see growth over the next five years. While the total current balance took a massive hit in the last two years due to the global financial crisis, dropping from US$703.368 billion in 2008 to US$312.324 billion in 2010, the next five years will see it grow back to pre-financial crisis levels. By 2015, the total current account balance for emerging and developing economies is forecasted to be US$763.781 billion.

Read more on about Emerging and Developing Economies, including industry information and trade statistics on EconomyWatch below.