The expectation of more protectionist regulation under Trump in the U.S. is contributing to a bullish approach to emerging markets, particularly in Asia. This is one view expressed at the Finance Workshop hosted on Lake Como by the Italian think tank, The European House – Ambrosetti.
In a panel discussion on emerging markets, panelists pointed out that the U.S. may be about to repeat mistakes made in markets that have lagged on the world stage. The fiscal stimulus of $1 trillion promised by the Trump presidency can be compared to a similar policy in Japan, where the impact on GDP growth has not been high.
Some members of the panel suggested that innovation will be the biggest driver of growth. Technology investments in the Chinese market, for example, are taking it through the same transition from quantity to quality that was followed in Japan, Singapore and Taiwan.
“Despite global and European pressures, there are certainly some signals of optimism. According to the International Monetary Fund, global GDP will grow this year by 3.4 percent, and it will accelerate to 3.6 percent in 2018,” reports Valerio De Molli, CEO of The European House-Ambrosetti.
Yet, it was suggested that despite the advantages of human capital, financial investment and technical innovation, the lingering infrastructure gap in Asia is still an issue. Natural resource scarcity is a cause for concern in China and may affect other emerging markets as supply and demand imbalances and rapid urbanization start to bite.
“Most of the new entrants into the global middle class will come from these new [emerging] markets,” says Dr. Linda Yueh, Fellow in Economics at the University of Oxford.