New Delhi: CEOs in the emerging markets are confident of maintaining high growth rates despite a slowdown in the developed world, driven by the improving connection within the region, a latest report says.
According to a new report from PricewaterhouseCoopers, growth in emerging markets is outstripping that of developed nations and blurring traditional economic distinctions.
Economic strength and confidence of the emerging markets could at least partially offset the impact of economic slowdown in the developed world.
Flow of capital, goods and labour among emerging economies is now growing faster than trade between emerging nations and developed countries, the report stated.
“Expanding connections of the economies in the developing world could insulate them from the worst impact of a downturn in the US and the western Europe. Understanding the distinct attributes of these nations and their corporations is critically important as their worldwide influence increases, ” PricewaterhouseCoopers India Chairman Ramesh Rajan said.
In addition to the well-established emergence of the BRIC economies (Brazil, Russia, India and China), intra-regional trade and investment is fuelling explosive growth in countries such as Indonesia, South Korea, the Philippines, Singapore and Thailand.
Meanwhile, CEOs of companies in the emerging economies believe that a slowdown in the developed world could slow commodity exports, while fallout from the credit squeeze in the US could impact local financial markets, the report said.
While, in the longer term CEOs were sensitive to the potential impact of global climate change.
Most CEOs from emerging-market economies said they would rely on internally generated cash flow, while the debt market ranked a distant second as a source of capital, the report said.
Equity markets, divestiture of existing assets and accessing private equity and venture capital ranked far behind as fund raising sources.
The report noted that since 2000, emerging markets have run a current account surplus and have exported capital to the rest of the world. Emerging markets have also driven the number of initial public offerings to record levels worldwide, with 70 per cent of all IPOs in 2007 coming from the emerging economies.
Besides, emerging economies now account for 45 per cent of world exports and have amassed 75 per cent of all foreign exchange reserves, it added.