International Trends To Watch Out For

Here are the trends that the McKinsey Quarterly predicts to watch out for in the years to come. I am presenting you the gist of the entire situation, coupled with my own elaborations, wherever I could. Please refer to the full article for your enhanced understandings of the situation.

The following trends look set to continue during the years ahead, long after the present turbulence in the world capital markets gets settled down:

1) The continued growth and deepening of global capital markets as investors pour more money into equities, debt securities, bank deposits, and other assets around the world. This will, inevitably, come true, as smart investors see troubles as opportunities for future growth. “Small” investors back off when the prospects of troubles loom large.

2) The soaring growth of financial markets in emerging economies and the growing ties between financial markets in developed and developing countries. This seems obviously true, as developed economies are comparatively saturated, and are hard to grow in. Thus, reaping “obscene” amount of success in developing economies is relatively easier, and worth giving a shot by all standards.

3) The shift of financial weight in Asia from Japan toward China, India, and the other fast-growing emerging markets. Diversity of any sort is, in general, good. Moreover, diversity by itself does hedging to some extent, giving rise to stability and competition.

4) The growing financial clout of the euro zone countries and the significance of the euro. The European Union is going to be a big phenomenon to watch out for. Collectively, it can take anything head on, be it either adversity at large or shared prosperity.

5) The burgeoning role of oil-rich Middle Eastern countries as suppliers of capital to the world, along with the rise of new financial hubs in the Middle East to complement the rapidly growing hubs in London and Asia. The UAE is one of the most important sources of international capital. It invests its “extra” petro-dollars in developed and developing economies. After all, the UAE also needs to do hedging for the future. Its “liquid money” is drying fast, and the size of the “family” is growing at a fast pace. Last year, somewhere close to 65% of the UAE’s GDP was earned from non-oil products and services. The UAE’s oil reserves are depleting. Now, it is heavily relying on tourism for its own survival and growth. That’s one of the precise reasons that the UAE’s culture and rules are quite “tolerant.”

While these trends reflect a shift in financial power from the United States toward the other parts of the world, the sheer size and depth of the US market will give it a leading role on the international financial stage for years to come. Apart from this, the UAE will play a major role in infusing the world with a lot of capital inflows. It is certainly a smart investor, with a lot of petro-dollars at its disposal.