The expectations about the state of the global economy for the current year by many international institutions were disappointing , which pointed to a decline in economic growth rates because of the slow growth in the economies of advanced countries and weakening global trade and shrinking of capital flows and fluctuating of oil prices.
As for predictions about the future of the global economy for 2017 we had addressed in our previous article, and in this article we will try to tackle the subject of the utmost importance, it carries great importance in supporting and determine the course of the global economy, so we will give the most important analyzes about and prospects of emerging markets over the next year, where emerging economies are one of the most important pushing factors of the global economy , and a major factor in its balance, and these economies are contributing in more than two-thirds of global growth, and the emerging economies include huge states and other small, and these economies gained its name from being based on development programs noting that the emergence is associated with public policy and a comprehensive strategy for the development.
The world has witnessed great changes in 2016, the United States will work to expand the fiscal stimulus policies, which was covered by the new president, Donald Trump in his speeches, and the US Federal Reserve bank raised the interest rate on the federal funds with a quarter of percentage point, and this in turn will lead to contribute to the acceleration of economic growth in the country, and the high value of the dollar, which may in turn creates widespread problems in emerging markets.
In this context, ” the World report of wages ” issued by the International Labour Organization warned of growing fears about the impact of the low rate of increase in wages on emerging economies in the world, reaching their lowest level in years.
According to reports, the global dollar-denominated debt cost, is one of the biggest negatives received by the countries of the world with the US decision to raise interest rates, with the rise of the dollar to high levels.
Expectations of President of the International Monetary Fund Christine Lagarde about global economic growth in 2016 were disappointing, noting the Fund has stressed that the emerging markets will also not exceed the significant economic growth or a sudden on the level of global debt, in the absence of restructuring programs. According to data from the International Monetary Fund, the debt levels had reached to the highest level since 2000, surpassing the barrier of 225 percent of GDP. Because of what it called by Lagarde that the financial sector is still suffering from weaknesses in many countries and financial risks are growing in emerging markets.
While the World Bank forecasts were that the growth rate recorded in China, 6.7 percent in 2016 compared to 6.9 per cent last year, and to stabilize the strong economic expansion in India at 7.6 per cent, and Brazil, Russia is undergoing a recession deeper than expected in January, as expected South Africa to achieve the growth rate of 0.6 per cent in 2016, while representing slower growth than the last January forecast with a rate of 0.8 percentage points.
The report, prepared by “Eurasia Group” for the benefit of the Arab Strategy Forum, that emerging markets may be at risk of great vulnerability to the weakness of European markets and the investments or the Middle East assets in Europe may be affected by , which are vulnerable to fluctuations in the European economy , the economic tensions in it which at the same time attempts of the countries in the region to attract external funding may collide to the inability of investors of the risk which was boosted by the economic tension in Europe.
The Bank «QNB» confirms: «The year 2016 witnessed a situation characterized by multiple drops in oil prices and global bond yields, in addition to political surprises, expected for broad changes to these features in the new year.
The report, issued by the Qatar National Bank Group, indicated it is generally assumed that the emerging markets will benefit from high oil prices, while it would be a burden on growth in the United States and the euro zone, as two main importers of oil.
The Institute of International Finance has predicted that emerging markets will witness the exodus of capital in 2017 for the fourth year in a row, but the expected outflows at $ 206 billion would be reduced from the estimates that up to $ 373 billion expected for the current year.
Institute predicted that private flows to non-residents rises to emerging markets in 2017 to reach 769 billion dollars, from 640 billion dollars this year with improved inflows into banks and stocks and bonds.
Finally, any expectations about the international economy for 2017 should take into account China, the driving force in the emerging markets as well as a number of emerging Asian economies. .
According to a research note issued by Goldman Sachs comparing the expectations of consensus 2016 , and the actual economic performance and experts say that some emerging economies have achieved better returns on investments this year, and China has surpassed the expectations of even modest and despite the emerging markets were not mired in debt , but it suffers from the exodus and the escape of capital so the responsibility of the major economies to provide the necessary support for the emerging economies and to motivate them to overcome the difficult conditions experienced by them that threaten its future and in front of this it is required to adopt reconstruction reforms to promote growth and policy makers to maintain the monetary policy and the use of fiscal policy in order to attract investment and re-displaced investments to be able these economies to overcome the obstacles to slow down in the future and that is reflected directly on the global economy.
Amer Al-Omran
Translated by : Mudhaffar Alkusairi
Rawabet Center for Research and Strategic Studies