Ernst & Young: Rapid-growth markets boosted (RGMs)

By Rob Starr, Content Manager, Big4.com

According to Ernst & Young’s quarterly Rapid-Growth Markets Forecast (RGMF) released recently,  an increase in intra-regional trade, easing of monetary and fiscal policy, and higher demand for commodities will lead to an improvement in the economic outlook for the rapid-growth markets (RGMs) in 2013.

However, fortunes will vary between geographies, with RGMs in emerging Asia and Latin America expecting growth to pick up from 7.0% in 2013 to 7.8% in 2014 and 3.8% in 2013 and 4.8% in 2014, respectively. The economic outlook for emerging Europe will remain subdued due to continued weakness in the Eurozone while lower oil prices will continue to hold back growth in the Middle East.

All of the RGMs have reduced trade barriers over the last 20 years, opening their economies to trade and the sharing of knowledge. This has continued to have a positive impact on their economies.

In the final quarter of 2012 encouraging signs started to emerge that the more trade-oriented RGMs, particularly those in Asia and Latin America, were picking up pace due to a combination of an improvement in intra-RGM trade and the impact of steps taken earlier in 2012 to ease monetary and fiscal policy

The successful soft landing is already beginning to have a positive impact on the other RGMs. As the recovery broadens across Asia, RGMF forecasts faster growth in Korea, Indonesia, Thailand and Malaysia.

Expansionary fiscal policies in Thailand, Malaysia and Indonesia have continued to boost investment and support consumer spending, enabling these economies to maintain strong growth. Since last quarter’s forecast, 2013 growth estimates have increased for Malaysia and Thailand by at least 0.5%.