Negative prospects for emerging markets


Despite US economic growth slowing down, upcoming regions are seeing a favorable global environment, with inflation at bay. 

However, the correction that affected the real estate market, along with the stricter interest rates will probably put growth at risk, states the global economic forecast report by Fitch Ratings published in London. The newest of the six-monthly evaluations lists 18 economies with positive prospects in debtor's risk, while 5 with negative, the latter including Eastern European countries, Hungary and Latvia.

The four strongest economies: the US, the UK, the Euro area and Japan produced 2.4% growth (compared to 2.9% last year), and there is an overall climate of stability. Three tendencies may threaten growth: reappearance of inflation, global money markets getting stricter, and correction in the real estate sector. Inflation increased in 61 out of 102 countries, while decreased in 41, but the trend is shifting: 47 countries predict further acceleration of inflation, whereas 55 can expect the tendency to slow. Base interest rates are forecasted to increase to 4.3% by 2008.

Prices in real estate market had radically increased (89% in UK from 2000 to 2006), and this trend may be affected by changes in the money market, induce correction, and significantly limit global growth. Upcoming European economies will be threatened most by global swings, as they have an exceedingly high demand for external funding (forecasted $250 billion in 2006 and $314 billion in 2007). (Gazdasági Rádió)


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