Hi Neil

Interesting quote from Martin Wolf writing in the FT about the challenges ahead for the world economy on Tuesday:

'Yet the remarkable fact about this turmoil is that emerging economies are emerging as safe havens: growth there is being sustained; and credit spreads have moved little.

'The apparent invulnerability of emerging economies to the US slowdown is noteworthy. It is duly noted in the World Bank's latest Global Economic Prospects.

'.......It is astonishing how widespread rapid growth has now become in the developing world. In 2007, for example, growth is estimated by the World Bank to have run at 10.0 per cent in east Asia, 8.4 per cent in south Asia, 6.7 per cent in eastern Europe and central Asia, 6.1 per cent in sub-Saharan Africa, 5.1 per cent in Latin America and 4.9 per cent in the Middle East and north Africa.

'The soaring prices of oil and other commodities make this picture of broadly shared growth yet more noteworthy. These have had remarkably little impact on global growth. It is far more plausible to view them as a consequence of growth than as a constraint upon its continuation.'

The growth momentum seems so strong that even if it is affected by a slowdown in developed countries - an effect I think is inevitable - there is plenty of capacity there to still see very strong growth.

One interesting area to consider is whether FDI into CEE from developed countries - the main driving force for growth - will slow if there is a sustained slowdown in the west, where most of the investment is coming from. I think this is partly how these economies are different to those of China, Brazil and Russia, which are being driven by massive trade surpluses.

The answer is pretty positive and I'll aim to have a look at this in a forthcoming blog.

cheers

Thanks Robin

yes - this re-enforces the view we had back in the Autumn that the credit crunch is turning the assessment of risk upside down.

Emerging markets are definately in!

Cheers
Neil