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From Sagar Chakraverty, Opalesque Asia:

The emerging markets (EMs) have now realised their economies are vulnerable if they remain largely dependent on exports to their best customers – the developed markets. Building up a domestic demand could help these growing markets overcome excessive dependence on western markets.

“We expect emerging nations to facilitate domestic demand over the next three to five years, and we hope to see transitional benefits even sooner as more EMs pick up their trade with China, the country that in our opinion will contribute the most to global growth in the near term,” said PIMCO’s executive vice president and portfolio manager, Brigitte Posch, in the firm’s June issue of Viewpoints.

The current conditions are ideally suited for emerging nations to raise their domestic demand on back of sustainable fiscal policies, lower inflation, larger pools of domestic savings, and substantial reserves. In contrast, the developed markets are grappling with sovereign debt burdens.

“This greater indebtedness has started to create additional concerns about a vicious cycle that may weigh on industrial economies’ growth for years to come,” cautioned Posch.

Imbalances heightened through greater exports What is so wrong with the decade old export-orient strategy of the EMs? According to th......................

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