It’s clear that many developed economies are suffering from recession. Predictions are that the EU and US economies can expect a maximum of 0 per cent growth in 2009 and the British Chamber of Commerce is warning of two very difficult years ahead for British businesses.

The slowdown of these economies means that savers and investors stand to lose out. People with money in the bank will suffer, as interest rates fall and inflation increases. Those investing in stocks and shares are also in for a rough ride as the markets become more volatile and speculative and investments become more risky.
 
Thankfully there is some good news! The credit crunch is not as global as the press would have us believe. Emerging economies including China, Russia, India and Brazil are still growing and there is money to be made from their buoyant markets if you can find a secure investment that you can trust.

Emerging Market Case Study – Russia
Unlike more developed economies, Russia’s GDP has experienced an average of seven per cent growth in real terms for the last ten years. To put this in perspective, the UK’s GDP hasn’t been above three per cent since 2003 and it has now dropped to below 0.5 per cent.

Another good point from an investment perspective is that Russia’s growing economy will be relatively unaffected by the current economic recession, since much of its income is based on vital raw materials and energy. GDP growth for Russia is predicted to continue at its current rate of just over six per cent for the foreseeable future. Unfortunately, the outlook for Europe and the US is not quite as good!

As a result of Russian economic and infrastructure development, there has been a huge boom in property prices in recent years. Moscow experienced a 68% increase in house prices during 2006. Housing demand exceeds supply and although the Moscow market has levelled to an annual increase of ten per cent, the development is spreading and St Petersburg is seeing a rise of 25 per cent per year. The property boom is set to continue, as the government introduces an excellent scheme to provide affordable, quality housing for all.

Unfortunately, Russia has a bad reputation in the UK and USA. Their image of Russia is of a poor, mafia-run, totalitarian country, but things have moved on a long way since that was the case and it shouldn’t put anyone off from investing in its expanding economy. In fact, Russia has developed into a politically stable, capitalist country with a rapidly increasing standard of living for its inhabitants. Believe it or not, Moscow is now one of the world’s most expensive cities; more expensive than either London or New York.

The performance of the Russian economy since the 1998 crisis has been impressive. Between 1998 and 2007, Russian GDP expanded by an estimated 69 per cent, real incomes of the population grew by 82 per cent and poverty rates were cut more than in half according to the World Bank.

How can you take advantage of an emerging economy?
Traditionally, investing in emerging economies has meant taking a risk, but this no longer has to be the case. There are established companies with good track records that can offer a good return on investment without the risk. Of course the highest returns are always associated with the highest risks, but even the conservative investor can make a good profit by investing wisely.

For example, Project 2 Invest is a Russian company which has been operating since 2004 in the Moscow region. It is an investment company that buys up large new housing developments wholesale before they are constructed and sells the completed houses individually at a profit. Project 2 Invest have financed its operations by attracting Russian investors who take a share of the profit enjoyed by the company. All Project 2 Invest investments are backed up by actual properties, providing investors with a guaranteed ten per cent annual return.

There are many other countries and companies out there open to investors. Don’t be fooled into believing that there isn’t money to be made in this “credit crunch”. You just need to do your research and find the right investment in a country not suffering the same recession as the US and Europe.

If you want to research into emerging markets you can visit the World Bank website for country information www.worldbank.org. For more information on investing in Russian property, visit www.project2invest.com or call 952 665 950.