Better Global Outlook

Things are looking up for the global economy according to the latest International Monetary Fund (IMF) global report. And once again, emerging markets - the main focus of investment abroad - continue to lead the way.

The IMF's most recent World Economic Outlook predicts worldwide growth of 4.5% this year with a similar figure expected for 2011. Growth for 2010 has been revised upwards since April after better economic conditions in the spring. According to the IMF, the growth in private demand during the first half of this year is "an encouraging sign".

The latest IMF quarterly look at the world's largest economies finds that, although global growth is expected to reach 4.5% this year, economic progress in advanced economies (e.g. the US, the euro zone and Japan) will only reach 2.6%. On the other hand, emerging economies will contribute almost triple this amount (6.8%), proving that the recent worldwide recession has changed the dynamics of the global economy.

A glance at predicted growth figures for the BRIC nations confirms this tendency. This year, the IMF forecasts 7.1% growth for Brazil, 4.3% for Russia, 9.4% for India and 10.5% for China. These bullish figures mean that those for advanced economies - for example, 1.2% for the UK, 1.4% for Germany and 2.4% for Japan - pale into insignificance.

For the IMF, macroeconomic developments in spring this year, "confirmed expectations of a modest but steady recovery in most advanced economies and strong growth in many emerging economies". The main economic indicators such as retail sales and industrial production show sharp hikes in emerging economies and very timid advances in developed countries. While retail sales among emerging markets are close to 160 points on the Index, consumer spending in advanced economies is barely above the 100 mark (the benchmark level from January 2007).

Recent financial turbulence with the Greek debt crisis at the forefront has led to marked fluctuations in currency, equity and commodity indices, but the IMF believes that despite this hiccup, "global recovery will continue". It points out that key emerging economies in Asia (principally China, India and Singapore) and Latin America (especially Brazil and Peru) "continue to lead the recovery".

The IMF's Managing Director, Dominique Strauss-Kahn was in Brazil recently. Speaking at the end of his visit, Mr Strauss-Kahn said that Brazil "has a key role to play in global economic governance. It is the largest economy in Latin America and is deeply integrated into the global trade and financial network". He emphasised that Brazil's economy is very stable and welcomed Brazil's presence on the world stage at G20 meetings. According to Mr Strauss-Kahn, "Brazil's future is inextricably linked to global economic prospects".

For Obelisk International, this key role is most obvious in the potential for investment in Brazil. Brazil offers a stable and booming economy, growing employment and purchasing power, and huge internal demand - all essential ingredients for successful investment. Not for nothing is Obelisk currently focusing all its investment attention on Brazil and the endless opportunities available there.

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