Money is rushing out of Emerging Markets. Blame China.
This article takes a look at the emerging markets and what effect they are going through due to the economic panic of the world. Since 2015 the emerging markets have lost $735 billion of capital investment from stronger economies. But China alone has pulled out $676 billion. This is a heavy blow to emerging markets because they cannot compete in the international markets without foreign investment. As their overall GDP declines their currencies get weaker and weaker. With a weaker currency the overall quality of life decreases with it.
With the recent oil crisis the Emerging markets will get hit even harder. I am concerned about these markets and I think the global leaders should take a stand and get some stability back for all the markets.
I share your concern for the emerging markets. Their decline will certainly have a negative effect on the people of those nations. What do you think global leaders should do to protect them? I don't know how leaders can prop up emerging markets without severely harming their own markets. Any thoughts? Personally I think it looks like we can support emerging markets more once the worldwide economy rebounds a little more.
ReplyDeleteThere is one obvious mistake. The GDP of China (no matter nominal GDP or real GDP) did not decline, but the growing speed of GDP. Another problem is that a weaker currency won't lead to decline of life quality.Even though GDP is the indicator of life quality, we cannot just come to the conclusion that declining GDP would cause the decreasing life quality. We can only observe from GDP that how one country's life quality would be.
ReplyDeleteAs for the decreasing investment from China, what data I got is that actually the China government increased its foreign investment. I am not sure where you got the data. And the weakened RMB is also due to China government's policy of increasing export. Only be weakening RMB, China's product can be more competitive in the international market.
Even if China has pulled out a large portion of investment, this can only tell us the this so-called emerging market is not emerging at all. More precisely, the emerging market might be too fresh or unstable to attract investors.