Emerging markets save global economy

The growing dominance of emerging markets and middle-class consumers from countries like India and China is creating a protection shield against terrorist attacks for the global economy, a new study shows. New middle-class consumers in emerging markets like India and China will drive global demand in ways never seen before and these are not the consumers likely to cower to terrorist attacks.

A Master card report observed that emerging markets save global economy from terror scare. These are not consumers likely to be cowered by terrorist attacks, it said. About one billion consumers in emerging markets are set to join the ranks of middle-class in the next two decades and would fuel global demand for goods and services with their aspirations and wallets. Immediately after the 9/11 incident, a number of analysts and industry chieftains had predicted doom and gloom economic scenarios, while similar negative projection were made after terror attacks in London, Indonesia and India.

More than five years have passed since the 9 / 11 terror attack, but the broader economy and stock markets worldwide have not only bounced back, but have grown even stronger since then, Master Card said in its report titled Global Economic Resilience: Five Years After 9 /11. Besides, a free marketplace rising per capita income and a bigger role for emerging markets are driving the economic growth stronger worldwide, while acting as a deterrent to any sharp plunge in consumers and investor sentiments due to geopolitical concerns, the analysts feel.

Terrorist attacks have failed to dent the broader economy as well as stock markets in these five years and the resilience of global economy so far has been sufficiently robust to weather these attacks, it added. The recent terrorist attacks have not only failed to create the intended global economic havoc but global economic growth has actually been stronger than ever before.

Some of the major terror strikes in India during the past five years include the Parliament attack in December 2001 and the recent bomb blasts in Mumbai’s local trains in July. Besides, London had witnessed underground train and bus attacks by suicide bombers in mid-2005 while Indonesia had its brush with terrorism, with bombings in October had its brush with terrorism, with bombings in October 2002 and October 2005 in Bali.

London and Mumbai returned to business in a matter of days. Analysts believe the growing dominance of middle-class consumers and the importance being gained by emerging markets in the overall global economy would offset any negative impact of terror attacks.

The report of The Economist as indicated, “First decade of the 21st century could see the fastest growth, in the world’s per capita income, in all of human history. Since 2000, per capita GDP in the world has been growing at 3.2 % per year, ahead of the previous periods of long and steady economic growth.

During the 1950s to early 1970s per capita GDP in the world grew by about 2.9% per year. Two key factors behind this extraordinary development is the rising role of emerging markets and the free marketplace.