Emerging economies will grow an average 4.7% a year between now and 2025 while developed economies will grow a comparatively anemic 2.3% a year over the period, a new World Bank report forecasts.
That means that by 2025, six major emerging economies – Brazil, China, India, Indonesia, South Korea and Russia – will account for more than half of all global growth, and the international monetary system will likely no longer be dominated by a single currency, the report suggests.
In addition, the success of the Big Six will drive growth in lower-income countries through cross-border commercial and financial transactions.
The report, Global Development Horizons 2011 -- Multipolarity: The New Global Economy, says that emerging economies that used to rely on technological adaptation and external demand for growth will have to make structural changes to continue driving productivity gains and meeting growing internal consumer demand.
“In many big emerging economies, the growing role of domestic demand is already apparent and outsourcing is already under way,” said Hans Timmer, the World Bank’s director of development prospects. “This is important for the least developed countries, which are often reliant on foreign investors and external demand for their growth.”
For investors and advisors, this global shift means that more developing countries and the firms within those countries will access international bond and equity markets, presenting new investment opportunities.