2010 BRIC outlook remains strong: Scottish Widows
Joe McGrath, 30 December 2009
Investment opportunities in banks, house building and consumer stocks will remain strong in countries such as Brazil, Russia, India and China (BRIC) in 2010, according to Scottish Widows Investment Partnership (SWIP). In the company’s annual investment outlook, SWIP head of emerging markets, Kim Cathechis, predicts that emerging market consumers have the immediate future of economic growth in their hands depending on their ongoing response to the various economic stimulus packages. Cathechis explained, ‘Stronger growth, continued low inflation and low real interest rates are all factors that favour emerging markets. But one of the keys to future growth is the emerging market consumer. ‘Unlike their counterparts in the developed world, consumers in emerging markets are at the beginning - rather than the end - of the credit cycle. ‘For example, mortgage debt in the BRIC countries accounts for only 9 per cent of gross domestic product, compared to 73% in the US.’ The SWIP report adds that while investors should be wise to the various trends affecting the merging market universe, it expects further growth in the BRIC region. ‘Much of the credit for this goes to China. The big emerging markets story of 2009 was undoubtedly its aggressive $582 billion economic stimulus package, aimed at infrastructure, housing and the consumer. ‘And as economic recovery strengthens during 2010, China will continue to lead the way: double-digit GDP growth is forecast next year. Indeed, we anticipate that growth in the BRIC economies, will far outstrip that of the advanced economies. ‘Looking ahead, stronger growth, continued low inflation in most economies, and low real interest rates are all factors that favour emerging markets.’
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