SUMMARY OF THE EAGLES ECONOMIC OUTLOOK (Madrid, March 2013)
After briefly reviewing key developments in the emerging world in 2012, the third annual update of the Emerging and Growth Leading Economies (EAGLEs) reassesses the economic relevance of emerging economies and compares them with a core group of developed countries. To this end, we follow the same rigorous but dynamic approach followed in previous reports given its benefits:
- Members of both the EAGLEs (the ‘prime list’) and the Nest group (the candidates to become an EAGLE) are not predefined but chosen based on their relative performance with respect to a single comprehensive criterion (contribution to global growth) and a transparent threshold. Last year Egypt became the first ‘fallen angel in our list and left the EAGLEs group while Chile and Ukraine were upgraded to the Nest group.
- Our revision of long -term forecasts for all emerging countries and major developed ones for the period 2012- 2022 concludes with one more change in membership: a worsening utlook brings again Ukraine out of the Nest.
- China, India, Indonesia, Brazil, Russia, Korea, Turkey, Mexico and Taiwan are confirmed as members of the EAGLEs group, while 1 4 countries continue to be part of the Nest, six of which are in Asia and four in Latin America.
- EAGLES and Nest countries together are expected to contribute more than two thirds to world growth between 2012 and 2022, with most of the incremental GDP located in Asia. Other emerging countries, frontier markets and least developed economies push up the share close to 80%.
- In contrast with this leading role, developed economies are expected to contribute only a fifth to global growth, half of which corresponds to the US.
- Long -term trends in emerging markets draw a solid picture, anticipating that the catch- up with developed economies will continue. Under the umbrella of macro stability and prudent policies during the last 10 to 15 years, the core of the EAGLEs is leading unprecedented transformations which are affecting a huge amount of people.This annual report dedicatesa special section to the role of ‘emerging’ people in sustainable growth.
- Increasing purchasing power has already allowed a massive transfer of population out of poverty, as well as the creation of a booming middle class. This will bring a huge change in consumption patterns in these countries.
Finally in this report we would like to remind that risks are also present in a general positive outlook. Last year’s challenging –even if still relatively positive-outcome for emerging markets has shown that full decoupling is unrealistic under strong trade, financial and confidence links. Being isolated is not possible, so the key is to be as prepared as possible for ‘the rainy days’as many emerging economies havealready done.
The radical change for emerging countries during the last 10 to 15 years has been the birth of the so -called ‘new normal’ of risk as a result of lower vulnerabilities, both in historical and relative terms to developed markets. However, the lesson should be that there is no room for complacency and further reforms should be implemented for our scenario of rapid convergence to higher income per capita to fully come true.