January 31st, 2012
11:25 AM GMT
Davos, Switzerland (CNN) — Financial experts gathered together for a CNN discussion were hopeful that emerging markets could weather the financial storm over Europe.
Ali Babacan, deputy prime minister of Turkey, explained how his country’s economy was tied to Europe. “Forty-five percent of our exports go to EU member countries and also we get a lot of FDI from EU member states, so when things go in a bad direction in the EU we are affected through those two channels,” he said.
“But the good part of the picture is 55% of our exports goes elsewhere and those non-European markets are growing quite fast and that is playing a very good balancing role,” he added.
Stephen Roach, formerly of Morgan Stanley and a professor at Yale University, questioned the validity of the concept of “decoupling,”— the idea of emerging economies becoming less dependent on Western economies.
“This concept of decoupling is really irrelevant,” said Roach. “We need to look at a more meaningful construct, which is ‘resilience.’ I think the emerging markets, the developing economy of the world, has great resilience, but they’re going to have to change the mix of their economy, focussing much more on their internal markets rather than relying on theses squishy external markets in Europe and the U.S.”
Luciano Coutinho, president of the Brazilian Development Bank, argued that almost all emerging economies continue to offer attractive investment frontiers that provide high profit, while Sir Martin Sorrell, CEO of WPP, said that this decade would see a shift to economies in Latin America, the Middle East and Africa – not just to China and India.
David Li Daokui, director of the Center for China in the World Economy, spoke of the structural changes needed to maintain China’s economic growth. “The problem is structural, the problem is sustainability,” he said. “Whether structural problems today can be reformed, dealt with, in order for the economy to continue growing in the coming decade.”
He added: “Today in China the key policy debates are about whether fundamental reforms can be or will be pushed ahead.”
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