Skip to content
Catholic Online Logo

By Catholic Online (NEWS CONSORTIUM)

10/4/2013 (9 months ago)

Catholic Online (www.catholic.org)

Reduced growth in emerging markets means less wealth for you.

Saying the global economy is experiencing "transitions on an epic scale," Christine Lagarde, managing director of the International Monetary Fund warned that "turbulence" in emerging markets could cut growth by a full percentage point.

When the IMF speaks, it's costly to ignore.

When the IMF speaks, it's costly to ignore.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

10/4/2013 (9 months ago)

Published in Business & Economics

Keywords: Lagarde, IMF, epic change, growth


LOS ANGELES, CA (Catholic Online) - Lagarde warned investors and policy-makers that turbulence in emerging markets could cut world economic growth by half a percent to a full percentage point. The cause of that turbulence is talk by the U.S. Federal Reserve of tapering its asset purchases.

What's happening here and why does this matter?

Emerging markets are identified by economists as those which are in the process of rapid growth and industrialization. The largest of those markets are China and India. Many smaller nations are also involved in the classification. These markets provide cheap labor and mass quantities of raw materials, even finished goods to the industrialized world for low prices.

Growth matters because it accounts for all the wealth the people of the world enjoy. Everything from food, to housing, to transportation, to every need and luxury is broadly summed by growth. As human population grows and as expectations for higher standards of living develop, growth must increase to keep pace. If growth remains flat, or diminishes, then somebody has to make do with less. The austerity can impact a little as a nation or the entire world.

In the United States, growth matters because it affects prices, interest rates, even retirement accounts. Less growth means less for everybody.

While a percentage point might not seem like much, the total figure could be in the billions or trillions. Spread around the world via a globalized economic system, you will feel the impact, even if you don't realize what's causing it.

Emerging markets depend on the easy cash to be had from the United States. Americans identify themselves as "consumers" and that means they will pay to be supplied with mass quantities of cheap goods. As cash flows from America to overseas providers, growth takes place in the newly-enriched emerging markets.

However, the Federal Reserve has suggested that it will soon begin tapering its growth, pumping less stimulus into the economy and allowing it to run more naturally, without the influence of fiscal policy. For a variety of reasons, this means less money available to flow to emerging markets.

Other large nations can pick up the slack of Fed tapering, but only to a small extent. Nations such as Russia and Brazil, which could help build up emerging markets, have problems with inflation so their central banks will not likely do much to increase the money supply by printing more currency as doing so would exacerbate inflation.

So just on the basis of talk by the Federal Reserve, planners in emerging economies must prepare themselves for the likelihood that the international market may become more competitive as American dollars become scarce. This causes their currency to lose value against the more precious dollar, and leads to a virtual tightening of the economic belt in emerging markets.

For people counting on these emerging markets for their investments, this is big news and a reason to examine their portfolio and plan accordingly.

For most of us, we will pay for this slowdown and make do with less, even though by world standards we are already fabulously wealthy and we will only feel a slight pinch. However, for people living in emerging markets without a social safety net, the consequences could be far more reaching, even deadly. Her use of the word "epic" is hardly hyperbole.

For that reason, when Lagarde speaks, the world had better listen.

Click here to learn about our Saint Michael the Archangel conference this Nov 1-3!

---


Pope Francis: end world hunger through 'Prayer and Action'


2014 - Distributed by THE NEWS CONSORTIUM

Pope Francis Prayer Intentions for July 2014
Sports:
That sports may always be occasions of human fraternity and growth.
Lay Missionaries: That the Holy Spirit may support the work of the laity who proclaim the Gospel in the poorest countries.



Comments


More Business & Economics

INDEBTEDNESS: One in three U.S. adults have 'debt in collections' Watch

Image of One in three American adults are so far behind in personal debt that many of their accounts have been referred to collections.

By Catholic Online (NEWS CONSORTIUM)

Some call it the American way, and it's become a most uncomfortable fact of life for many Americans. Personal debt is at an all-time high, and at least one in three Americans, 77 million people, have had their debt referred to collection agencies as a result. ... continue reading


LUMP OF COAL - LITERALLY! Coal companies pushed to brink of insolvency by Obama policies Watch

Image of The very fuel that fed the Industrial Revolution and powered U.S. growth for much of the past century, the coal industry finds itself on the brink of insolvency, with many companies going out of business.

By Catholic Online (NEWS CONSORTIUM)

Dealing with cheap natural gas and tighter regulation, the U.S. coal industry has fallen on hard times. The very fuel that fed the Industrial Revolution and powered U.S. growth for much of the past century, the coal industry finds itself on the brink of ... continue reading


The poor getting power in U.S. - typical household is now worth a third less Watch

Image of The old saw goes that when only a few people are winning and more than half the population is losing, surely something is amiss.

By Catholic Online (NEWS CONSORTIUM)

The rich get richer - and the poor have children. But seriously, folks, the poor is getting even poorer in the United States. Recovery from the last big recession in 2007, hasn't really taken off as of yet. Recent studies show that the average American ... continue reading


HAIL BRITANIA! Britain declared fastest growing economy in developed world Watch

Image of Britain is now

By CNA/EWTN News

There will always be an England, as the old song goes. While the United Kingdom has experienced highs and lows, it's always recovered - and prospered. This was born out by the recent news that Britain will be the best performing major economy in the developed ... continue reading


Amazon sits on slippery slope as investors pull out from company Watch

Image of Amazon, despite constant reinvestment into technology like smartphones and drones, continues to lose investors and profits.

By Catholic Online (NEWS CONSORTIUM)

Amazon lost over $16 billion in value on the night of July 26, a sign that investors were growing weary of the retail giant's repeated failures to make a consistent profit. LOS ANGELES, CA (Catholic Online) - This was Amazon's largest quarterly loss in two years, ... continue reading


The buck does stop here: Chinese currency set to close the gap between it and the dollar Watch

Image of A new study from China indicates that the Chinese yuan is likely to become the third most used international currency by 2019.

By Catholic Online (NEWS CONSORTIUM)

China's currency, the renminbi (RMB), is looking to become the third-largest international currency behind the U.S.'s dollar and the euro by 2019 said the Renmin University of China in a report published on July 20. LOS ANGELES, CA (Catholic Online) - Last year, ... continue reading


Financial consultant warns that U.S. is entering third largest stock bubble Watch

Image of A new study by financial consulting firm Smithers & Co. warns that the U.S. is entering another major stock bubble, the third largest in U.S. history.

By Catholic Online (NEWS CONSORTIUM)

A new research report by financial consultant Andrew Smithers, chairman of Smithers & Co., suggests that the U.S. is in the midst of another stock-market bubble, much like the bubbles in 1853, 1906, 1929, 1969 and 1999. LOS ANGELES, CA (Catholic Online) - ... continue reading


WARNING: The most important article you may ever read - We need a moral revolution at the top, before pitchforks appear in the street Watch

Image of In the game of plutocracy you start by owing money to the bank and as it progresses, you owe more.

By Marshall Connolly, Catholic Online (NEWS CONSORTIUM)

An article published in 2011 in Forbes is making the rounds again and people are talking, but despite the dust on the copy, it's a timely conversation. The article by Brendan Coffey reveals that there are four companies that control 147 other companies and those 147 ... continue reading


U.S. to shortly overtake Saudi Arabia, Russia in production of natural oil Watch

Image of In Texas and North Dakota, oil extraction is soaring at shale formations as companies split rocks using high-pressure liquid in a process known as fracking.

By Catholic Online (NEWS CONSORTIUM)

The United States has often found itself at the mercy of unstable nations for the majority of its oil imports. That day may soon be past after American begins the extraction of energy from shale rock, eventually overtaking both Saudi Arabia and Russia in oil ... continue reading


Unemployment among black Americans twice that among whites Watch

Image of The jobless rate among whites last month was 6.6 percent; among blacks, 12.6 percent. The unemployment rate for blacks has averaged about 2.2 times that for whites.

By Catholic Online (NEWS CONSORTIUM)

When African-Americans marched on Washington in 1963, it was under the banner of "Jobs and Freedom." There remains a great inequity with the former; the number of unemployed blacks in America remains twice as much as whites, and has remained that way for ... continue reading


All Business & Economics News

Newsletters

Newsletter Sign Up icon

Stay up to date with the latest news, information, and special offers

Daily Readings

Reading 1, Jeremiah 26:11-16, 24
11 The priests and prophets then said to the chief ... Read More

Psalm, Psalms 69:15-16, 30-31, 33-34
15 Let not the waves wash over me, nor the deep ... Read More

Gospel, Matthew 14:1-12
1 At that time Herod the tetrarch heard about the ... Read More

Saint of the Day

Saint of the Day for August 2nd, 2014 Image

St. Eusebius of Vercelli
August 2: Christians who breathed a sigh of relief when Constantine ... Read More

Inform, Inspire & Ignite Logo

Find Catholic Online on Facebook and get updates right in your live feed.

Become a fan of Catholic Online on Facebook


Follow Catholic Online on Twitter and get News and Product updates.

Follow us on Twitter