Tags: Yardeni | emerging | markets | G-7

Yardeni: Emerging Markets Surpass G-7 in Key Indicators

By Dan Weil   |   Wednesday, 05 Feb 2014 11:25 AM

Emerging markets have economically surpassed their more developed brethren by some measures, which will likely limit the damage of current emerging market turmoil on the global economy, says Edward Yardeni, president of Yardeni Research.

In January 1995, industrial output of emerging markets was 29 percent below that of advanced economies, he writes in a report. By the end of last year, emerging markets were on top by 61 percent, he says.

In January 1999, the Group-of-Seven (G-7) economies accounted for 48 percent of world exports, Johnson writes. That share now stands at 31 percent.

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The implications of these data are positive for the world economy, Yardeni says. "Obviously, a widespread emerging markets crisis would be a calamity for the global economy," he writes.

"However, it is precisely because EMs [emerging markets] have become so much more important to the global economy that such a crisis might be less rather than more likely."

Companies operating in emerging markets will likely maintain their access to capital, Johnson says. "Therefore, the current emerging markets crisis shouldn’t morph into a global contagion and recession."

Interestingly enough, while emerging stock markets are struggling, frontier markets, which are smaller and have less liquidity, are thriving.

The MSCI Frontier Markets Index has risen 0.9 percent so far this year, compared to an 8.5 percent drop for the MSCI Emerging Markets Index. In 2013, frontier markets gained 16 percent, while emerging markets slid 12 percent.

"We have picked up where we left off last year," Slim Feriani, CEO of Advance Emerging Capital, told Reuters. "The key difference is currency, you do not have currency moves like we have seen in the Fragile Five [Brazil, India, South Africa, Turkey and Indonesia]."

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