Ernst & Young forecasts continued increase in purchasing power parity
Bassam Hage, MENA markets leader Ernst & Young
According to Ernst & Young the dynamics of the global economy have changed with a new set of fast-growing markets challenging the position of the established advanced economies.
These rapid growth markets (RGMs) are expected to grow collectively by 6.2 percent this year, almost four times more than the anemic growth expected in the Eurozone, according to Ernst & Young’s new quarterly Rapid Growth Markets Forecast (RGMF).
Four Arab countries – Egypt, Qatar, Saudi Arabia and the UAE – were among those selected.
The 25 global RGMs will account for 38 percent of world consumer spending and 55 percent of world fixed capital investment, according to the forecast. By 2020, rapid growth markets will account for 50 percent of global GDP when measured at purchasing power parity (PPP).
Bassam Hage, MENA markets leader, Ernst & Young, says: “Rapid growth markets are becoming increasingly important in terms of both their overall weight in the world economy and their global influence. While the advanced economies struggle with weak growth, RGMs seem well-placed to better weather the economic storm.”
According to the report, Qatar had the highest nominal GDP (US$) per capita at PPP in 2010 among the 25 RGMs, followed by the UAE.
Bassam added: “With the exception of Egypt’s slow recovering economy which is being weighed down by local developments, Qatar, Saudi Arabia and the UAE are expected to see continued strong growth in the future. Economic activity across the region has slowed in the past few years reflecting reduced economic confidence and greater caution. However, GCC government spending in areas such as infrastructure, healthcare and social policy is expected to drive further growth.”
Alexis Karklins-Marchay, co-leader of the Emerging Markets Center at Ernst & Young commented: “While further deterioration of the economic situation would not be good news for the RGMs, such a scenario would, however, even further increase their weight in the global economy as the advanced economies decline.”
