Emerging markets, generally

The analysis of emerging countries in the light of the Russian war

Thursday, April 7th, 2022

The analysis of emerging markets is traditionally part of my lectures and generally not changing very much from year to year. However, this year (and beyond?) is different. A kind of limited global downturn was already in the cards last fall for the forthcoming quarters. But the Russian war makes the outlook for the global economy both worse and more uncertain about both depth and length of the downturn. The world is indeed confronted with the abominable black swan.

The spillover to emerging markets

Also emerging markets all over the world are affected badly by the ongoing terrible war development in the heart of Europe. There are clear spillover effects on the less advanced countries as well. Of course, the Ukraine and Russia itself are hit the most. But there are many other countries in the emerging world that are now meeting worsening conditions that are directly or indirectly linked to the Russian war.

When considering the already existing economic troubles before the eruption of the war Russian war, the timing for the commenced war in February could not be less favorable for emerging countries. But emerging countries are not equally hit by all the deteriorating political and economic developments. In very general terms, one may say that less advanced countries far away with, for example, energy and food resources tend to be better off than countries with corresponding shortages. Altogether, more details should be examined.

Reliable calculations are currently not possible     

I feel pretty sure about the conclusion that accurate point forecasts for individual emerging countries and emerging regions currently are not possible – at least not without precise assumptions about uncertain parameters like the supposed depth and length of the war, energy and other commodity prices and – not to forget – transports and delivery times.

However, when a major event like a big war in Europe happens with a military superpower involved, our models do not work anymore because of the lacking historical experience in a comparable war. Using another one or two different assumption baskets about depth and length of the war, a number of different scenarios could be developed. But still, we are not talking about a forecast. Instead, it is about scenarios.

Thus, further studies on war developments with impact on emerging markets would be beneficial. More can be found.

Influence on emerging markets due to the war

Initially, it would be useful to single out a number of different negative global developments that already had shown up globally in 2021. Here we find

  • rising global inflation, interest rate hikes not far away,
  • rapidly rising energy prices,
  • insufficient supply of chips, other IT components, metals plus transport bottlenecks,
  • since last fall worsening GDP forecasts for the beginning of 2022.

What we now can see as a further consequence of the war, are currently worsening trends for several of the negative developments from last year

—>  more inflation (coming from energy, agricultural products, metals, intermediate IT-goods, transport bottlenecks)

—>  further and/or faster global/American interest rate hikes than anticipated some months ago (means higher costs for emerging countries borrowing in foreign / American currency)

—>  higher American interest rates may mean a stronger dollar (which would lead to higher costs for many emerging markets since most foreign credits by emerging countries have been taken up in dollars)

—>  clear weakening GDP growth both in advanced and emerging countries.

—>  slowing FDI from Western companies in emerging countries as a result of increasing general uncertainty and risk aversion.

Conclusion 1: The foreign debt situation will remain an increasingly important indicator for emerging countries (https://databank.worldbank.org/source/quarterly-external-debt-statistics-gdds). Check it out!

Major producers of oil, gas, agricultural products etc., are, of course, better off than less developed countries that need to import a lot of these commodities. Commodity production at home and imports from abroad are other important factors that should be considered when emerging countries are analyzed, particularly now during the Russian war (https://www.worldbank.org/en/research/commodity-markets).

Conclusion 2: Also commodities play an important role for the development of many emerging countries, particularly during the Russian war.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board


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International Women’s Day 2022 – female upgrading good for the economy

Monday, March 7th, 2022

Even if the position of women in the society and particularly on labor markets has improved during the past decades in quite a number of countries, no one really can be happy about noted developments. So much more can be done – even in Sweden which actually in 2021 was in the lead among EU countries according to the so-called equality index (https://eige.europa.eu/gender-equality-index/2021) – and particularly in emerging markets and other less advanced countries.

Focus on the relationship between equality and economic growth

There are many good arguments in favor of genuine equality between women and men. These arguments may have a social, political, democratic, human or psychological angle. On the occasion of this year’s International Women’s Day, it may be appropriate to focus this time on the mechanisms that lead from female upgrading – particularly on the labor market – to better economic (GDP) growth in the longer run. It is a reaction chain from microeconomics to macroeconomics. What is often neglected: Also men would benefit from such a development.

However, such a win-win situation should be explained more deeply. There are still more than enough skeptics who do not really understand the positive relationship between (more) female equality and GDP growth. Visibly and sustained improving equality for women has to be considered as an economic win-win-position. Another fact that should not be forgotten: The more women are added to the labor force, the more wages are – ceteris paribus – earned in a country.

Unfortunately, this win-win-situation usually is not very well explained by experts and politicians. More should be done – and can be done quite easily. At least if transparency is considered to be important.

In my view, it makes sense to apply a life cycle perspective for achieving positive and visible improvements of female equality. The life cycle goes from birth to retirement in a number of different stages – for example from school, professional education, entry into the labor market to equality at work and job promotions.

However, a visible positive correlation of improved female equality and higher GDP growth in the medium or longer run assumes that such improvement measures are both extensive and sustained. Given this order, there is a stronger scientific relationship than the other way around, i.e. when correlations between good economic growth and improved female equality are measured.

Going more into details, the chain of this microeconomic input to macroeconomic reactions and better GDP growth may practically be implemented as follows:

¤ application of a national strategy to improve female equality – partly simultaneously – on all levels by both law and collective bargaining partners;  if possible provided with numerical objectives and incentives,

¤ annual evaluations, including amendments if necessary,

¤ a first scientific report on achievements and the possible impact on purchasing power, private consumption and GDP after five years,

¤ thereafter further reports on these issues every third year on some more occasions, following up what else has been achieved in this new period for female equality and possible new positive contributions to economic growth.

Theoretically (scientifically), the reaction functions could be described the following way after sustained and sizeable injections of improved equality:

  • improved disposable income for women by fairer wages and better / increasing entry into the labor market,
  • additional financial contributions to private consumption,
  • additional stimuli from private consumption to GDP (favoring also men),  
  • (possibly) new additional jobs.


Of course, all these assumptions and developments need quite some years and a lot of determination to be come true. However, this is exactly the reason why there is no time to lose to fight for more female equality.

All the conclusions mentioned above can also be applied to emerging market countries and other less advanced countries. Therefore female empowerment should be much more launched in a global perspective.


Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board


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Emerging countries on German import markets 2001-2021

Wednesday, February 23rd, 2022

Two facts are obvious when analyzing international and German developments in the past two decades. One is that Germany remains the number one importing country in Europe, the other one is that emerging countries have gained substantial markets shares in the advanced country of Germany. Although the table below does not explain everything, one should get some illuminating impression – also in general terms – about successfully exporting emerging markets and late EU-member countries.

German imports by country*
(percent of total imports)
2001 2021 Difference
U.S. 8.5 6.0 minus 2.5
UK 6.9 2.7 minus 4.2
France 9.2 5.2 minus 4.0
Sweden 1.7 1.4 minus 0.3
Poland 2.5 5.7 plus 3.2
Czech Rep 2.7 4.2 plus 1.5
Slovak Rep 0.8 1.4 plus 0.6
Hungary 2.2 2.5 plus 0.3
Romania 0.4 1.2 plus 0.8
Bulgaria 0.1 0.4 plus 0.3
Russia 2.7 2.8 plus 0.1
China 3.7 11.8 plus 8.1
India 0.5 0.9 plus 0.4
Vietnam 0.2 0.9 plus 0,7
Korea 0.9 1.1 plus 0.2
Malaysia 0.7 0.8 plus 0.1
Turkey 1.2 1.5 plus 0.3
South Africa 0.6 1.0 plus 0.4
Mexico 0.3 0.6 plus 0.3
Brazil 0.8 0.6 minus 0.2
Asia (China included) 15.5 22.2 plus 6.7 (minus if China excl)
Africa 2.1 2.2 plus 0.1
Latin America 1.6 1.3 minus 0.3
Europe 70.9 66.8 minus 4.1

* In current prices. Source:  https://www.destatis.de/EN/Themes/Economy/Foreign-Trade/Tables/order-rank-germany-trading-partners.html; own calculations

It is indeed no surprise that Poland and the Czech Republic have been particularly successful on the large German market – but also the Slovak Republic, Hungary and Romania have made visible progress. As one could expect, Asia is the continental winner on the German market for importers, due to China’s success story. India – on the other hand – is still moving very slowly (but has been improving all the same). Vietnam performed quite nicely in recent years.

A number of other Asian – mainly South East Asian – countries, however, stagnated more or less in Germany since the beginning of this century and contributed strongly to the slightly declining market share of Asia minus China. This is not always known. Africa still remains, unfortunately, unable to catch up significantly. The same seems to be the case when it comes to Latin America which has been losing momentum in the past two decades, mainly caused by disappointing Brazil.

Summary: It may be concluded that emerging countries from Asia – but not all of them – and countries from the previous Comecon area in Eastern Europe obviously have succeeded well on the tough German market during the past twenty years. Most countries in Latin America have their difficulties to compete. Persistent future progress on foreign markets assumes much more focus on improvements of education and institutions.


Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board


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