How it will look like the future of emerging economies in 2017?

How it will look like the future of emerging economies in 2017?

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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