The FINANCIAL — Let us try and leave the years from 2009 behind us. So much has happened to give planners and strategists sleepless nights. We have just run through a tornado in the financial and economic sectors of mostly the US and European economies.
And as we are about to bake our cakes for Christmas and New Year, six major central banks have come together to provide a ray of hope that the financial turmoil will not make us retreat and that the world has not come to an end. The stock markets have started galloping again and we are made to believe that the eternal worries of losing value of our savings, finding investments to start up ventures or expand them, and keeping the fires burning during winter at home are indeed over. Thank heavens.
While the financial fires raged across most countries, there have been strong performances by some countries which have doggedly held the course and maintained a healthy economic growth. And these countries have proven that it is not necessarily all gloom and doom, and that the next set of scenario planning for positive growth and people’s welfare do have substantial fundamentals.
Let us look at some statistics: Brazil recorded 7.5% GDP growth, is ranked the 6th largest economy with a total of $2.517 trillion and a per capital income of $10,816. It is an impressive performance. China pulled off $5.93 trillion by way of GDP, is ranked 2nd largest economy with a GDP growth of 10.4% and a per capita income of $4,382. India, now claiming the largest population on earth and combating corruption across government is ranked 9th largest economy, recorded an 8.5% growth, with a GDP of $1,632 trillion and a per capita income of $1,371.
Russia is another country with a strong growth curve. It’s GDP was $1.465 trillion, had a 4.9% GDP growth with a per capita income of $10,521. It is ranked 10 on the scale of largest economies. Indonesia, once a corruption-ridden and inefficient economy has sprung back to life and is now a significant global player. It recorded one trillion in GDP with a 6.1 growth and a per capita income of $4,200. Argentina, bankrupted and unable to pay its debt just 10 years ago with riots and five presidents in 10 days has performed well with a GDP of 370 billion, 9.2% GDP growth and a per capita income of $9,583.
Turkey, which too needed a bailout fund of $10 billion ten years ago is now one of the fastest growing and dynamic economies in the European hemisphere. It recorded a GDP of $1.116 trillion, a 9 per cent growth and a per capita income of $10,106. Georgia’s GDP at $20 billion and an average growth rate of 7.9% during 2004 to 2008 took a dive after the 2008 war with Russia, but has regained a remarkable strength with a positive forecast of 6% for 2011.
The statistics are for 2009 and there will be marginal differences when adjusted, but the performances show that the doom and gloom surrounding us in Europe have not not necessarily been the case with the vibrant economies of Brazil, China, India, Russia, Indonesia and Turkey, merely to site some examples. A number of other countries, from Sri Lanka to Zambia have also posted positive growth and these economies have not been severely damaged by the crisis that is being managed by world leaders now.
Brazil, China, India, Russia, Indonesia, Argentina and Turkey comprise a massive labour force of 1.6 billion which is approximately 50% of the world’s labour force. This is significant as half of the working humanity has indeed been employed in economies which were healthy and were growing. In addition, the Purchasing Power Parity ratio in these countries were almost double that of their GDPs, allowing employees and their families to a better value for the money they have earned to spend on food, shelter, education and transport.
These successful economies are indeed keeping a close watch on the US and European economies and how they will perform in 2012 and beyond. Any continued austerity measures and cut backs on investments will have a direct and long standing impact on the economies of emerging markets. If there be a global scenario planning for growth and the avoidance of financial and economic disasters, it is important mainly for developed economies to understand that it is no more valid and efficient for them to continue to strive for higher and higher standards of living and spending which often sucks out much of the money required for real economic development at home and for investments overseas..
The next phase of scenario planning on a global stage needs to address issues of inequality in wealth distribution, whether it be in Germany, Britain or in Argentina which will take into account the creation of a global mechanism to redistribute global wealth through sound investment policies which will provide incentives to corporations to put more money into agriculture, tourism and manufacturing in developing and emerging markets such as Georgia. I have often argued that, while donor-funding and financing of development projects are useful, it is critical to incentivise private sector to take the investment risks they ought to take in emerging markets and energise their ventures through a multiple scheme of low cost development finance, tax incentives and low premium risk insurances. Such a strategy could perhaps bring about an even and prosperous development platform on a global stage.