New economic models for new realities

Given the complex relationships now driving today's global economy, analysts can no longer look to the United States as a predictor of market movements. Emerging markets need to be given a heavier weighting in the global economic equation.

Emerging market giants such as China often seem to have the upper hand over the established economic powers. Both the US and the European Union have been experiencing trade deficits in their bilateral trade with the Asian giant for many years.

Although at present, foreign direct investments are flowing from developed economies towards emerging markets, there is also an increasing counter-flow taking place. Cash-rich businesses from emerging market economies are becoming familiar investors in established businesses in the west. As emerging markets mature, the investment current from emerging markets is likely to increase.

These complex, non-linear, and well-distributed trade relationships dilute the effect that economic upheavals in the United States may have on the rest of the world, or what economists are referring to as a 'fundamental decoupling' of these economies.

All these point to the fact that the world economy is no longer US-centric, or primarily determined by events in developed nations.

In consideration of these new relationships, HSBC has adjusted forecasts downwards for the developed economies and upwards for emerging markets.

Consistent with its century-long leadership in emerging markets, HSBC economists are developing analytical tools that capture these new economic realities so that clients can get a better view of emerging opportunities not only in their part of the world, but from a truly global perspective.

HSBC's Global Research economists are well-placed to build new, practicable models that better represent the new economic order where emerging markets now play a significant role.

Expert emerging markets advice

As emerging markets continue to evolve, the global investor faces unique risks and opportunities. For this reason, progressive and pioneering investors value the advice of financial experts in these emerging markets who know the local conditions and can guide them through the territory.

Hongkong and Shanghai Banking Corporation Limited, the founding member of the HSBC Group, was established over a century ago to finance the trade between Europe, India and China. As early as 1865, the Bank saw promise in the economies of Asia and invested when many others preferred caution. It is this experience with and expertise in emerging markets that has benefited HSBC clients for over 140 years. And the knowledge built on that global experience will help the Bank and our customers benefit from the growth of emerging markets in the century to come.