The roller coaster ride continues in global financial markets, with the Dow Jones Industrials gaining 150 points yesterday – all of it in the final half-hour prior to the closing bell. Asian markets followed that lead overnight, and so far European markets are also following suit to the upside.
While it’s certainly too soon to say if the credit-contagion has run its course, this is a good time to take stock of the bullish fundamentals that should eventually help support global markets.
On this note, the International Monetary Fund (IMF) recently issued an update to its World Economic Outlook, boosting its forecast for even more robust economic expansion.
According to the IMF’s new calculus, global GDP growth should advance 5.2% in 2007, and they expect the same above-trend growth rate to continue in 2008 as well. You can probably guess that the main “swing-factor” in this upgrade is China: which recently announced that 2nd quarter GDP surged nearly 12%!
According to the IMF’s statement, “Emerging market countries have continued to expand robustly, led by rapid growth in China, India, and Russia.”
Sticking out like a sore-thumb in the IMF data, and standing in sharp contrast to emerging markets; the IMF reduced its expectations for U.S. growth, forecasting an expansion of just 2% in GDP this year for our economy.
According to analysis from Henderson Global Investors, “Strong growth in emerging economies is boosting global growth to a 35-year high.” It's too bad the U.S. isn't more fully taking part.
So even though we are in the midst of a global risk-aversion sell-off in financial markets, there is still a silver lining in these storm clouds, at least for investors in international markets.
I just provided an update to subscribers of my Global Market Investor service, telling them which markets around the world offer the best long-term profit potential right now. If you would like to see which markets should be on your short-list for potential investment, click here!
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