Emerging markets drive global recovery: ASEAN official

15:57, July 28, 2010      

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Emerging markets are driving global recovery with strong economic performance supported by their evolution from export-oriented growth to more domestic demand-driven growth, an Indonesian official told Xinhua in an exclusive interview recently.

"Clearly, global recovery is driven by the emerging markets. Other big emerging economies have also shown resilience against the global crisis and will recover quite strongly in 2010 and beyond," said Sundram Pushpanathan, deputy ASEAN secretary-general for ASEAN Economic Community.

He said that this year, China is expected to grow at 9.6 percent, while Brazil and Russia are poised to show positive growth this year after experiencing slight negative growth last year.

He added that India, just like China, has been quite strong with a 5.7 percent growth last year.

Meanwhile, he said, ASEAN's performance has been quite robust, with slight negative growth during the first two quarters of 2009, but has rebounded strongly afterwards.

ASEAN is expected to recover to 5.6 percent this year.

According to Pushpanathan, the shift from export-oriented growth to more domestic demand-driven growth reflects better self- reliance in terms of absorption.

Moreover, he added, emerging market economies have much lower level of public debt (around 38 percent of Gross Domestic Product) as compared to that in industrialized economies (90 percent of GDP) .

"This fact has influenced foreign investors when assessing their investment portfolio and resulted in them allocating a large part of their funds to emerging markets, including Brazil, Russia, India and China (BRIC countries).

Meanwhile, he said, since 2000, the share of FDI flows from emerging markets to global flows has increased from 1.4 percent to 10.8 percent in 2008. On the other hand, he said, direct investment into emerging markets dropped in 2008 and recovered slightly last year, and is expected to show more positive growth in 2010.

The BRICs accounted for 64 percent of these flows during that period, with China taking in 53.5 billion dollars inflows in 2008.

Pushpanathan said that according to the International Monetary Fund World Economic Outlook 2010, the world economy is expected to rebound in 2010 with growth projected to be 4.2 percent this year and 4.3 percent next year, following a negative growth of 0.6 percent last year .

That drop was mainly due to a sharp drop of 3.2 percent in the advanced economies.

"However, emerging economies proved to be more resilient during the current global crisis, with growth of 2.4 percent in 2009," he said.

Source: Xinhua


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