© Reuters. Raiffeisen Capital Management: Positive long-term prospects for emerging markets
Raiffeisen Capital Management’s Cee & Global Emerging Markets team analyze the possibility of recessions in the US and the eurozone and remain positive on emerging markets
There is still a heated debate about the possibility of recession in USA and in the euro zone. Often in this context it is not considered that we are referring to the average of the entire economy or, better still, of the entire economies. Even if it must be taken into account that, if important sub-sectors of the economy have an opposite trend, the average says little. In general the Team Cee & Global Emerging Markets di Raiffeisen Capital Management argues that large swathes of the manufacturing sector are in fact in a sort of recession. Therefore, most of the commodity markets are characterized by falling prices and some interest rate sensitive sectors, such as the real estate market, tend to weaken. In parallel in many regions we are witnessing a service boomthe demand for labor rises, in turn generating income and new demand.
THE DIFFICULTIES OF CENTRAL BANKS
The fiscal stimulus of recent years are still having an effect and partly overcome (still) the braking impulses of the rate hikes of interest. This is most evident for industrial production in the United States USA which only represents the11% about the gross value added. In the the euro zone the figure is slightly higher, but even here only the 17% about. Central banks can only slow down demand in the services sector to a limited extent with interest rate hikes but at the same time they cannot remain completely passive, while theinflation remains above the level of the set target despite the declines…
** This article was written by FinanciaLounge