Analysts are pointing out that the world economy is on a recovery course which is synchronized with several characteristics such as debt management, funding of projects among which is the process of structured commodity finance. The opportunity for such growth curves is seen in the emerging and developing countries who have overcome the slowdown in potential growth rate due to the Golden Financial Crisis nearly a decade ago. Much of the growth of these emerging markets is due partly to the demographic change, which could become a double-edged sword if not managed properly. However, the retardation of growth rate is not only because of the demographic changes but also a drop in the productivity growth opine economists.
Asia driving growth
The quality of the rebound in the economy is largely attributed to Asia’s fast growth factors. It was seen that other parts of the world failed to leverage the available opportunities. Instead of emerging economies with their commodity exporting characteristic were able to develop economies and emerge with a 2.7 percent growth rate.
Other market regions which brought about the changes include the Caribbean region, the Latin American region where the forecast for growth is 2% in this year. The increase is notably at 0.9% in 2017. Apparently, Brazil is arriving from the deep recession and the growth in the Middle East as well as the North African region is also pointing towards growth but at a lower rate of 3.2 percent.
The solution for emerging nations to leverage and aim for higher growth is commodity financing. In the process, a key change has been in the revival of commodity prices. At the same time, it appears there is an increase in the trading activity marking recovery. It is also seen as the strength of investment. The world trade volume is known to have grown by as much as 4.3 percent in less than a year and will also reach a forecast of nearly 4 percent in the following year. Another development in this segment is the recent increase in the portfolio flows as well as lending. Nearly half or more of the stable and beneficial form of foreign direct investment are part of this management plan.
However, one key issue which financing is unable to manage is the ‘financial stress,’ as well as the rise in geopolitical tensions. These are threatening developing countries and emerging economies. When these risks are minimized, and the untoward external development is contained, then a balance would emerge. At the same time, it is seen that market sizes in India and China have the ability to overcome such adverse developments. However, there are no such resilience factors in other emerging countries such as Brazil and even ex-superpower Russia. These countries are not able to survive in the adverse external environment. It is necessary for such economies to aim are a revival of their key sectors and to realign them with current market forces so as to emerge as an economy on the rebound.
The factors which are aiding faster growth in emerging as well as developing countries is the hunger the common demography has for growth. The potential in these countries is immense ad they are theoretically possible to catch up on the levels of productivity as well as high-income countries.
Besides, the potential rate of growth with respect to emerging and developing countries are also narrowing down.