The global crisis has further enhanced the relative growth prospects of emerging markets (EM) capital markets. Advanced economies’ capital markets will continue to make up the bulk of global financial assets, developed markets (DM) deleveraging and EM leveraging notwithstanding. Emerging Asia has not only the largest capital markets, but also the most developed markets in the EM space. From the perspective of global investors and, even more so, financial services providers, some (segments) of the rapidly growing EM financial markets can only be accessed with some difficulty and tapping into their growth requires a well-thought-out, focused strategy. This fact notwithstanding, the "opportunity costs" of not building exposure to – or a platform in – the EM will be increasing over time... [more]

The North African region has strong economic potential underpinned by solid growth prospects, its favourable strategic location at the crossroads of three continents, abundant energy resources, strong EU links and growing financial sectors. Healthy external finances, manageable public debt levels and stable monetary regimes set the stage for strong future growth. In order to fully unleash their growth potential, Algeria, Egypt, Libya, Morocco and Tunisia have to continue to diversify their economies, increase their regional integration, reduce subsidies and labour skill mismatches, and provide easier access to credit for the private sector. [more]

Brazil has come a very long way since the 2002 presidential elections that almost pushed the country into default. This year's presidential elections will be contested by two candidates with broadly similar views of how to manage the economy, making the elections a relative non-event – at least from a short-term market point of view. If the next government succeeds in implementing a medium-term fiscal adjustment (a big "if"), there is no reason why Brazil won't be able to achieve 6% growth. This might go some way in silencing some of the critics who believe that Brazil does not belong in the BRICs... [more]

The euro-area countries urgently need to slash their debt and they will have to find new ways to address this task in the process. Germany’s debt brake is an intelligent concept for achieving a long-term reduction in public debt that could also be remodelled to fit the conditions in other euro countries. National debt brakes could help cut public debt on a long-term horizon without jeopardising the growth prospects of the euro-area economies. [more]

Most Eastern European countries have left recession and will record positive growth rates this year. But the recovery has been credit-less so far. Credit is still declining in most countries and will only pick up slowly. NPLs continue to trend up in almost all countries, but are already close to expected peak levels. In terms of contagion from the Greek debt crisis, Bulgaria, Macedonia and Serbia would suffer most from a potential withdrawal of Greek parent banks. Hungary seems most exposed to a reduction of foreign investor holdings of local assets. [more]

Russia's boom in 2003-2007 was driven by rising oil prices and capital inflows. In mid-2008, Russia was hit by a commodity price shock and a reversal of capital flows. A deep recession followed. However, the situation has started to stabilise as of mid-2009. Massive monetary and, with a delay, fiscal stabilisation efforts have provided support, as have higher oil prices. It is still open whether Russia will be able to reduce its vulnerability to oil price fluctuations by generating non-oil growth. An improvement in Russia's conditions for doing business would be necessary to improve the country's growth potential. Nevertheless, economic growth at reasonable rates is feasible. Average GDP growth of 4% p.a. over the next few years is a plausible baseline, with risks on the upside. [more]