Emerging Markets and Inflation for 2012

I see two emerging trends of interest in 2012. The first is the realization that the global economy is no longer driven by the US or other developed markets, but by those economies in Asia outside Japan and in the global emerging markets. The second is that growth outside the US and continued monetary and fiscal stimulus around the world will eventually lead to renewed inflation which should start to come back later next year.

As in 2008, the GDP growth forecasts in the table below show that the general global macroeconomic and financial market environment is characterized by the birth of what Morgan Stanley calls the Asia/emerging market-centric global economy. Led by China, emerging markets are taking a dramatically rising share of world manufacturing output. Emerging markets' share of global nominal USD GDP is now forecast to be level with that of developed markets by 2016 (under IMF definition of GDP). As shown in the table, global GDP growth is forecast at 3.5% in 2012 consisting of 1.2% growth in the G10 developed countries offset by 5.7% GDP growth in emerging markets and 6.4% in Asia excluding Japan....631 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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