EMs to drive global growth: Minister of Finance
16 Dec 2018 – 8:17
Minister of Finance, H E Ali Shareef Al Emadi (second left); Berat Albayarak (second right), Minister of Treasury and Finance, Turkey; Christian Sewing (right), CEO, Deutsche Bank; and Chris Giles, Economics Editor, Financial Times during the plenary session at Doha Forum yesterday.
Doha: Emerging Markets (EMs) and the US will be the two key economic blocs that would drive the global growth in the next five years. The world is going to witness a significant growth in the Emerging Markets in long term,
H E Ali Shareef Al Emadi, Minister of Finance, said yesterday,
Participating in a plenary session on the ‘Growth potential of Emerging Markets and the impact on the global economy’ at Doha Forum here yesterday, the Minister pointed out the EMs witnessed a phenomenal growth in the past 20 years.
“If you look at the market (EM) in 1990, it was representing 30 to 35 percent of global GDP. This number today is about 55 to 56 percentage. Most of the projections for next five years is that this number will go probably to 60 percent plus”.
We are going to witness emerging market growth in a big way going forward, he said.
On Qatar, which is part of Emerging Markets, Al Emadi said the country witnessed good growth in 2018, and most growth came from the private sector. Despite the volatility in oil market, the country’s private sector grew by a significant 6 percent during this year.
Qatar looks at EM in three different ways. In terms of energy market, EMs definitely plays a significant role. Over 40 percent of Qatar’s energy supply is going to this market. In terms of connectivity, the country’s national carrier Qatar Airways is connecting Qatar to more than 100 cities in EMs.
The Minister said Qatar had been enjoying a fiscal surplus for 15 straight years, until 2014. “We had used these surpluses in emerging markets and developed economies.”
Al Emadi noted that the year 2018 was a bit difficult for EMs due to the trade war and a strong dollar. Tensions regarding trade issues are big concerns for the emerging market growth. “We have also seen stronger dollar putting pressure in the second half of 2018. We are also seeing uncertainties in the Europe due to Brexit. All these are sending negative message to the global market”, he said.
Berat Albayarak, Minister of Treasury and Finance, Turkey said the global economy is undergoing a shift from West to East. What’s happening in China and India are incredible.
On Turkey, he said the country is witnessing an interesting a strong journey. Over the past 16 years, Turkey has been witnessing a huge transformation economically, politically and socially.
Turkey has got a dynamic young population. An estimated 29 to 30 percent of the country’s population is below 30 years. The local economy will benefit from this demographic dividend. For the past 16 years, Turkey has been investing a large portion of its budget cake in education. The internal production capability of Turkey is pretty strong, the Turkish Minister said.
Christian Sewing, CEO, Deutsche Bank was also of the view that the emerging markets are the growth engines of future.
More than 20 percent of Deutsche Bank’s revenue is coming from EMs. “But as a risk adviser I would tell my clients to diversify their investments in terms of region, countries and currencies.”
Sewing said the year 2019 will be bit shaky compared to 2018. “Globally, we have been enjoying eight straight years of upward trend and now we also see the kind of the end of a normal cycle.
The world is currently facing a slew of risks, including economic and geopolitical risks indicating that 2019 will be more vulnerable than 2018”, he said.
Chris Giles, Economics Editor, Financial Times, was the moderator.