Saturday, Jun 19, 2010
Gulf News
Dubai Emerging countries such as China and the UAE will play leading economic roles on the global stage as advanced countries lose ground in coming years.
So says Euromonitor International in its latest report, Top 10 largest economies in 2010, based in part on the International Monetary Fund's (IMF) 2010 Economic Outlook.
The study states that China will become the globe's largest economy, surpassing the United States, in less than 10 years.
"By 2020, there will be a major shift in the global balance of economic power compared to 2010," states the paper, noting that "large consumer markets in emerging economies will present enormous opportunities for businesses.However, income per capita will remain higher in the advanced world".
The report looks at the top economies in total gross domestic product (GDP) measured through what's better known as PPP or purchasing power parity, a formula that uses a basket of goods to compare purchasing power between countries.
Asked by Gulf News where the United Arab Emirates will fit into a new world order in less than a decade, Euromonitor said that the UAE will play a large role in the world community despite its relatively smaller economic size.
Media Eghbal, Countries Editor, Countries and Consumers for Euromonitor International, said from London that "the UAE ranked 55th in the world in 2010 in terms of the size of its economy and will move up to 51st place by 2020.
"Whilst the UAE's economy is not comparable in PPP terms with the huge economies of China, Russia, India, Brazil or Mexico it is nonetheless considered an important emerging market. In global rankings, the UAE has a smaller economy than other major players and a much smaller population so the larger economies stand out."
Position advantage
There can be no doubt that the UAE and its geographical location between the advanced world and countries in an emerging Asian subcontinent will help buoy prosperity within the next decade as the country invests in imports and exports, tourism and energy.
The UAE is part of a trend in which "emerging economies are catching up with the advanced world. By 2020 there will be changes in the global balance of economic power."
Euromonitor said "the rise in importance in emerging economies will have implications for global consumption, investment and the environment. Large consumer markets in emerging countries will present enormous opportunities for business."
The economic slowdown in the West among advanced countries has been happening since the 1990s due in part a declining economic trend "accelerated by the global financial crisis in 2008-2009", the report stated.
By 2020 the US will find itself still in second place among the world's largest economies surrounded on both sides by China in first place and India in third which will bump Japan from the number-three ranking it now enjoys.
India is now considered the fourth largest economy representing 5.8 per cent of the world total. The US has declined from 23.7 per cent of world GDP in 2000 in PPP terms to 20.2 per cent this year.
Euromonitor said the US real GDP contracted by 2.4 per cent in 2009.
Dubai The effect of a softening euro on United Arab Emirates markets is mixed depending on who you ask, says a leading UAE financial observer.
Simon Williams, Chief Economist with HSBC based in Dubai, said that as the UAE dirham gains strength against a weaker euro, importers are saving serious cash on a long list of goods imported from Europe.
The currency volatility, however, is not good for UAE exporters amid less demand in Europe for goods given tighter times and budget restrictions at all levels.
"The dirham is flat against the dollar but against the euro it is appreciating strongly," said Williams, noting the dirham has moved about 20 per cent. "If you're an exporter you will find yourself in a difficult position. Demand is weak and the euro is declining."
By Derek Baldwin
Gulf News 2010. All rights reserved.
