Developed vs. emerging world – snapshot

April 30, 2007

Here a small graphic that provides a good overview of the relative weight of the rich and “developing”/”emerging” world today.

Emerging market catch-up has been impressive, reaching now more than 50% of world GDP in purchasing power parity terms. Emerging market share in world trade (see a previous post) is growing too. Yet but given their demographic weight, there is much more to expect.

Energy consumption levels are high – China will indeed need to make an extra effort, although it is to be reminded that the historical culprits of global warming are the rich countries.

As regards foreign exchange, the situation appears to be very different from the pre-Asian crisis situation. With the commodity boom, emerging market growth, and increasinlgy prudent macroeconomic policies, reserve accumulation by emerging markets has been impressive.

Market capitalisation levels show that the emerging world has still a very long institutional way to go and will need to strengthen institutional capacity for capital markets for better long-term conditions.

The graphic was just compiled by Merrill Lynch, with data from emergingportfolio.com.“Developed” world here is the G10: US, Euro area, Japan, Canada, NZ, Australia, Norway, Switzerland, Sweden. “Emerging” world, well, the Rest:ecosnapshotworld.png

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