The strength of emerging markets is the only thing preventing a full-blown global recession, Hexam's Marina Akopian believes.
Akopian, the Hexam EMEA Absolute Return fund manager, says cash-rich emerging market players are currently asserting unprecedented influence over large Western economies and corporations.
She points to the recent woes of US giants Freddie Mac and Sally Mae which have been substantially financed by the Russian Government.
The emerging markets contribution to global growth is expected to reach 61% this year, up from in 47% in 2007.
Akopian feels Russia, Latin America and parts of Asia are in a strong position to weather the US slowdown, as only 19% of emerging market exports now go to America.
“Emerging markets are now financing the world and dragging the global economy out of recession,” Akopian says.
“They are effectively bailing out the developed world and they can afford to do so with their large current account and budget surpluses.
“Not only that, but they are not dependent on the US for growth, with domestic consumption rising strongly across key countries like Russia, Brazil and China.”
Akopian also refutes the argument the emerging markets are more volatile than established regions.
“Emerging markets are in much stronger economic shape than the developed world – taking into account external creditor status, low household and corporate sector leverage and high corporate profitability.
“It should be remembered that recent volatility in emerging markets was a direct result of a contagion from the US-led financial crisis.
“I believe the real risk is failing to invest in emerging markets.”IFAonline
Achievements, charity work and other happy snippets
Laughable excuses for persisting
Spent 56 years at Schroders
Warns on profits