A boxerâs stamina is judged by how quickly he rebounds from a blow. Strength of a country, then, could be measured by how quickly the economy can bounce back from a crisis. The Economist provided one measure when it compared countriesâ percentage change in real GDP per person from the fourth quarter of 2007 through the second quarter of 2011.
The chart shows a striking contrast: GDP per person has rebounded substantially faster in many emerging market countries compared to developed countries. The top 10 are all emerging markets in Asia, South America and Eastern Europe. China topped the world with nearly a 35 percent change in real GDP per person, followed by India, which had a change rate of more than 20 percent. Argentina and Brazil also grew significantly, as did Poland, Turkey and Russia.
Developed, debt-burdened markets detracted the most, with Ireland and Greece declining more than 10 percent. The United States had the seventh- worst change in real GDP per person, although it rebounded more than Portugal, France and the Netherlands.
This chart reaffirms our belief that emerging markets offer significant growth potential for investors. Since the recession began a few years ago, the growth weight appears to have begun to tilt toward the E-7 countries. Historically, the G-7 countries have contributed 50 percent of global GDP with only 11 percent of the total population. In contrast, E-7 countries (the seven most populous emerging market countries) produced only 21 percent of global GDP. We expect the GDP of the E-7 will continue to grow, and will one day outpace the growth of the G-7.
The key is in government policies, so our team will closely follow the countriesâ leaders to see which nations support and encourage this growth over the next several years. It is in those countries where we believe the best opportunities lie.
