Emerging Markets Must Continue Investing in Economic Growth

As the world economy grows and evolves into the 21st century, there is bound to be some ups and downs along the way in terms of overall GDP. While industry experts have forecast that the global economy will double by the year 2020, many factors will play a role on how it will ultimately unfold year after year until it reaches it’s expected potential value. In the last five to ten years, the emerging markets have been the main driving force behind it’s current growth rate and will still be in the next few years, but they must continue to make the right investments in their individual economies to keep the global economy moving forward.

China, the world’s largest exporter and soon to be biggest importer, has enjoyed double-digit growth over the last 10 years, but has recently announced that it is going to put measures in place to manage a consistent annual growth rate of around 7%; for the next few years. While this news has had a particular negative effect on some markets around the world, China, the world’s biggest emerging market, maintains that it wants to be able to stabilize it’s own economy and by doing so, the entire global economy will exponentially follow suit and become somewhat more stable itself. In the long term, what is best for China will subsequently be best for the rest of the world’s economies.

India, the second most populous nation and an appealing emerging market with incredible potential, has been slow in making the right investments in it’s transport and port infrastructures, and unless they reach their domestic economic goals, the global economic forecasts will not fully come to fruition as expected.  However, the government does have an ambitious target for building it’s required infrastructures and is just now starting to generate more interest from the private sector to help build India’s foundation for it’s economic future. Other major emerging markets such as Brazil, Russia and the continent of Africa to name a few, must also continue to make giant investments to grow their GDP in order for the global economy to continue to grow into it’s vast potential, and they seem to be on the right track but still have much work and further investments are needed; if they intend to keep up the pace.

When it comes to these types of large investments, these emerging markets must think long-term and continue to grow their economies even if the overall global economy goes through some tumultuous times. Without investment to attain future prospects, there simply won’t be any rewards to be gained down the road. As the old saying goes ... you can’t win the game, if you don’t play. When it comes to enjoying long-term investment success, investors can’t get a return in the future if they don’t invest in the first place.

UK Shipping Industry is in Need of Foreign Investment Money

There have been reports released recently that indicate that the United Kingdom is going to require at least £400 billion invested into the nation’s transport infrastructures over the next ten years in order to be able to compete efficiently and effectively in the future global economy. Although the government announced they would be increasing their annual public investment into the sector by £3 billion in 2015/2016, analysts believe that these are mere drops in the bucket compared to what is needed now and in the future. The government is not solely responsible for these huge infrastructure projects that are needed. The private sector also has to put in their share in order for it to work for the benefit of the country. Analysts believe that herein lies one of the problems.

Building and maintaining the UK’s transport infrastructures are essential to the country’s future economy and it is evident that much more investment is needed before the nation can reach it’s full potential. The UK only has so many limited investors domestically that have the money and the means to fund these massive capital investment projects. As a result, it has had to seek sizable private investment from investors in other countries. The UK is not alone in looking for funding for much-needed infrastructure projects and port improvements. Most countries in the world have found themselves in the same financial situation, as they all attempt to prepare themselves for the (expected) doubling of the global economy, by the year 2020. Every nation wants to be ready to contribute and compete, but like the UK, many lack the investment money. As a result, major foreign investors with the liquid capital and available credit to invest, have many choices as to where to invest and what to invest in.

The UK is attracting some investment from the oil-rich and cash-positive middle east countries such as the UAE and Qatar. Dubai’s DP World, one of the world’s largest port operators, already has a huge stake in the soon-to-be-completed London Gateway. Their £1.5 billion investment has created thousands of jobs, while stimulating the local economy. As well, it was just recently reported that Qatar is considering investing approximately £10 billion in infrastructure as well as energy and other projects in the near future. Although it is early in the discussion phase, industry experts say it looks promising. These examples of market opportunity truly define the global economic free-enterprise market system. The reality is that in the credit-based global economic system, cash is still king. That being the case, rich nations such as the UAE and Qatar are just taking advantage of their surplus cash and using it to make wise investment decisions.

Chinese Investors Encourage Growth in Emerging Markets

Private investors are set to dispense more money into emerging market countries this year as their economies grow intensely and interest rates in developed markets remain low. Though it is much harder for countries to make the transition from emerging to developed economies than commonly thought, only 13 countries have moved from upper middle to high income, (one of the measures of a developed economy) since 1960, according to the World Bank. Of those, five are the Asian tigers; others include Greece, Ireland, Spain and Israel. The world is in for a new change, as we wait for the anticipated boom. Essentially, emerging markets will drive this boom.

Emerging markets will account for the biggest change in the coming future. Developed nations will remain motionless as less-developed nations continue to grow. In 2013, global growth will be a difficult climb but is projected to reach 3.5%; with emerging markets providing much of that boost. When considering the investment potential of emerging market classes, it is clear that they are open for business and more and more investors are seeking access to emerging markets, in hopes of increasing the value of their investment holdings. If growth is the objective, it may be captured better in the early stages by investing in the currency or government bond market, first hard currency then local, rather than equities.

Emerging economies cannot grow in isolation. Economies grow alongside one another. By relying on only one economy, growth is likely to remain static. By relying on a pool of resources in other economies, countries can become independent and determine their own positioning through competitiveness. China, an importing and exporting powerhouse, works in symbiosis with other emerging economies; to assist in the efficient flow of transporting goods. If an emerging economy expects to succeed in the competitive global trade industry, they must work in collaboration with countries like China, and other global leaders within the shipping industry; to get their goods to international consumers.

Investments are being made within broad emerging markets as well as specific and tactical with individual countries. The pace of China’s economic growth will influence numerous trends over coming years. This pace also affects the growth rate of many other emerging markets that do business with China. Analysts believe this growth, should help emerging market stocks outperform their U.S. counterparts and provide alternatives for confused investors, who have grown apprehensive of western markets.

My Personal Analysis of the Value of the Port of Shanghai

Port of Shanghai is the largest and busiest up-and-running shipping port in the world, and has broken the record for TEUs handled in 2011. Achieving this great milestone creates lots of expectations for China in coming years. Only recently in 2010, Port of Shanghai overtook Port of Singapore's title as the world's busiest port with 29,069,000 TEUs compared to Port of Singapore's 28,431,000. The following year, in 2011, Port of Shanghai set a historic record, handling over 30 million TEUs. This feat is good news for the Chinese economy, as analysts expect the demand for shipping containers will continue to rise, to accommodate the shipping industry further growth; in 2013 and beyond.

Traditionally, Port of Shanghai had few residents and was not a developed region. In 1074, Shanghai upgraded from village to town status, and then became an official city in 1297. The Port of Shanghai faces the East China Sea to the east, and Hangzhou Bay to the south. It includes the heads of the Yangtze River, Huangpu River, and Qiantang River. Port of Shanghai is centrally positioned among these rivers, contributing to the ease of China's shipping industry as it becomes more efficient and effective, in providing access to Asian markets; as well as shipping ports in the rest of the world. Without a doubt, China has positioned the Port of Shanghai as the leading port using this T-shaped waterway, also known as "the Golden Waterway." Yangtze River or Chang Jiang, is the longest river in Asia, 3rd longest worldwide, and is considered the most important river in history, culture and economy of China. This river generates transportation for as much as 20 per cent of China's gross domestic product. This port has established itself as an advantageous geographical location due to this waterway.

Nevertheless, analysts are expecting good things to from this historic port. For thousands of years, the Yangtze River has been used for transportation of cargo and other fine resources and evidently it will continue to do so. Records being broken last year, leave observers in suspense. Will China's shipping port reach record highs? Or fail to meet expectations? Either way, you can expect China's investments to do their share in the global trade marketplace and continue to prosper and experience growth in the shipping industry.

Investing in Asia Offers Investment Alternatives

Although North American markets have shown their resilience and are demonstrating to the investment community that they can steadily improve their economic growth, some investors are still enamored with the long-term growth and prosperity; experienced in many Asian countries.

In many instances, investors are comforted by the fact that countries in Asia, like China and India, have repeatedly recorded strong economic growth; for the last half a decade. And, even if recent figures show a slight decline in development, they are still offering safer and more favorable investments, than the traditional opportunities available in the West.

The dependency that the world has upon cheap manufacturing and labor in the East, ensures that countries like China and India will remain a prosperous and a profitable investment, for some time into the future. Because of this, it would appear that the opportunity to invest in Asia and Asian markets, is an investing alternative that more investors are considering; when exiting North American investments.

Emerging Markets Invest in Infrastructure to Ensure Growth

And after nearly two decades of robust growth, China’s economic progress is beginning to taper off. Many experts believe that the current economic slowdown experienced by China, is partly their own fault. As the economy in the United States and European Union remains slow (the 2 major trading partners of China), it has become apparent that the Asian economic giant (China), has become overly dependent on their major trading partners, and must now focus their attention; on the domestic front.

In order to maintain economic growth around the World, it is time for emerging markets like India, Russia and Indonesia, to drive global growth forward; today and into the future. However, growth in these emerging markets will not be possible, without an integrated inland transportation service to handle the ever-increasing flow of containers; coming from mainland factories. Thankfully these nations have recognized the importance of shipping containers to emerging markets, and have repeatedly made investments into their own ports, vessels and infrastructure, to ensure their country's long-term prosperity, economic growth and future development.

Officials at all levels of government and in the private sector have highlighted the importance of investing in an inter-modal transportation system. In most instances, a fully integrated transportation system, remains their top investment priority. For example, China spends a whopping 18.5 percent of its GDP on logistics costs, compared to about 10 percent in the United States and Europe.