The world economy is under threat. In spite of better news from some quarters, Europe is in a clear recession that started in the second half of 2011, and the US economy will undergo a fiscal adjustment in excess of 3 per cent of output at the end of this year. China – along with much of the developing world – is in a deceleration phase.
The fear of another crisis is still here and the question is whether anyone can help to alleviate its impact. In this context, emerging markets could have a new and important role to play. Their relative importance in the world economy has increased dramatically. Currently, they represent 50 per cent of global gross domestic product (in purchasing power parity terms) up from only 30 per cent 20 years ago.
These countries now have more room for manoeuvre in the face of a deterioration in economic conditions. Most have adopted sound macroeconomic policies, controlling inflationary pressures and consolidating improved fiscal positions – in contrast to their more developed peers.