New Drivers for the World Economy

The emerging markets like BRIC and OPEC countries are presenting at least a trillion dollar economy for the markets the world over. The US as a driver of world economy is loosing its sheen. The weakening of the US Dollar against the currencies of the Emerging Markets is causing a ripple in the forex reserves of all countries. The Chinese Yuan, Indian Rupee, Russian rouble and almost all other emerging market currencies have been increasing over the ast few months. The US Dollar has weakened considerably over the same time. the condition of other major currecies like EURO, GBP and Yen is not any better and they are also weakening . The increasing price of the crude oil at Decembe futures of USD 92 to a barrel and diminishing reserves in US have brought the deadly levels of price of oil rising to USD 100 in immediate future.Worldwide, Governments and various treasuries like to keep their forex reserves in US Govt Papers but the diminishing value of USD against various currencies have force them to look at other alternatives and stock markets in countries like India, China and other emerging markets seem to be best bet in this turmoil. According to a very recent IMF survey, even if one tenth of this money flows into equity market, it represents a value of USD One trillion in emerging markets. It is this money which is flowing into these markets that have taken and would take markets to new highs.

Who would have expected the markets to rise to new highs of 19000+ in india. The fundamentals in these countries are very strong. In the developed world, housing and other sectors are taking their toll and would also effect China and India. The US Sub Prime crisis has already effected the european banks. The ageing population, shifiting of the production base to other markets and rising input costs in the US and Europe have all contibuted to the change in scenarios. Now the major production hub in the world is China and the next country to come up after that would be India. This explains why, the corporate results in India are getting better dispite rising input costs and slowdown in the developed world. India and China would very soon become the major drivers of world's consumption base. A huge population base, ever rising incomes, growing aspirations present a hge consumption opportunity in these countries for the next fifty years or so. This coupled with their traditional clout in Africa are a hige opportunity. Already China is fast approaching Africa for new markets and and as a source for fuel. India has had a traditionally strong relations with African Countries. Thus , it is easy to comprehend that the growth rates of world economy will be determined not by US and Europe but the ecopnomic conditions in the Emerging Markets.

They would be the new drivers of the World Economy