Deloitte Touche Tohmatsu sees continuing problems for the global economy in the first quarter of 2009 in a new report, but predicts that companies can still find attractive opportunities in emerging nations in the years ahead.
The firm's quarterly Global Economic Outlook report acknowledges that the recession represents a setback for emerging markets, but sees them continuing to have productive potential and unmet need for investment.
"The principal problem is confidence, in banks to lend, and in investors to tolerate risk," said Deloitte Touche Tohmatsu director of global economics Ira Kalish in a statement. "That is why we see and will continue to see unprecedented government intervention during this crisis."
The report suggests a third wave is looming as new bank write-downs loom due to credit card defaults gaining in the U.S. Global trade is at risk due to the credit crisis, and commodity-exporting countries face new problems due to the collapse of commodity prices.
Across emerging markets credit availability, currency movements and commodity prices are directly affecting growth. Frozen credit markets and plummeting currencies have led to a landslide of risk downgrades of former "growth champions" such as India, Vietnam and Argentina, among others. In frontier economies - such as Nigeria, Slovenia, Croatia, Kenya, Romania, Vietnam and others - where the standard of living had begun to rise, the crisis has cut off needed capital, thereby slowing growth considerably.
However, in the long run companies will likely continue to find attractive opportunities in emerging nations, even if growth there slows temporarily, Deloitte predicts. Through reform and strengthened legal, regulatory, and infrastructure development, developing markets could heighten their appeal for foreign investors.
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