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Emerging Markets Still Have Room to Grow

Short-term problems may have slowed growth, but emerging economies are still likely to grow at above-average rates as they close the gap with developed countries.

Emerging Markets Still Have Room to Grow

Tim Strauts: In today's chart we are going to look at the GDP on a per capita basis for selected countries. 

GDP per capita is calculated as GDP divided by population. The ultimate goal of all countries is to improve the livelihoods of its people, and per capita GDP is the best measure we have to measure relative well-being. The chart looks at seven different countries. You’ll notice a big difference between the emerging countries--India, China, and Brazil--and the developed countries--Japan, United Kingdom, Germany, and the United States. For example, China’s economy is the largest globally with a 16% share of world GDP, which is just slightly ahead of the United States. But on a per capita basis, China has much smaller output per person of only $12,000 per person. The Unites States' output of $55,000 is 4.5 times larger. While emerging markets have had very strong growth in the last 15 years there is still a lot of potential for future growth as they seek to catch up with the rest of the developed world. 

However, there are many problems that may slow growth in the short-term like high debt levels, low oil prices, aging populations, and political corruption scandals. But in the long-term the emerging markets are likely to continue growing at above average rates which should bring more economic prosperity to their people and provide attractive investment opportunities.

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