The world's fastest growing economies

If you think that China is the world's fastest growing economy, think again. However, among the major (or large) economies, China does remain the fastest growing economy. But if you take smaller nations too in the list, China slips down the list.


1. Ghana: 20.146%
Many economists believe that Africa is the next boomtown. Several African nations are now growing at a rapid pace, trying to make lives better for their people. None more so than Ghana. For quite a long time, Ghana received many an unflattering adjectives to describe its economy: 'worst managed', 'disastrous', etc.  However, the small African nation has since then come a long way and is the world's fastest growing economy today.
Ghana's economy is growing at a blistering 20.15 per cent, says Economy Watch. It's a $23.4-billion economy.


2. Qatar: 14.337%
With a GDP growth rate of 12.337 per cent, Qatar is the world's second fastest growing economy, says Economy Watch. It's a $132-billion economy. The economy of Qatar, one of the world's largest exporters of petroleum, is primarily oil-based. High oil and gas prices have boosted the economy of this Gulf state over the last few years.


3. Turkmenistan: 12.178%
Turkmenistan is blessed with the world's fourth-largest reserves of natural gas. The country is also the world's 10th largest producer of cotton. It is the world's third fastest growing nation with a GDP growth rate of 12.18 per cent, according to Economy Watch. It is a $41-billion economy.


4. China: 9.908%
China is the world's fourth fastest growing economy at 9.908% GDP growth rate, and in monetary terms it is of the order of a whopping $6 trillion, says Economy Watch. China, which most economists believe could soon upstage the United States as the world's largest economy, showed some signs of slowing down.However, the rising inflation rates in China are posing a new challenge to the country.China's gross domestic product grew 9.6 per cent in the third quarter as compared to the same period last year. The growth rate slowed down from 11.9 per cent in the first quarter and 10.3 per cent in the second quarter.
5. Liberia: 9.003%
Even though Liberia remains one of the poorest countries on earth, it has shown robust economic activity in the last few years. This African nation is the world's fifth fastest growing economy with a GDP growth rate of 9.003 per cent, says Economy Watch. It is a $1.05 billion economy.


6. India: 8.43%
Economy Watch says that the India, at 8.43 per cent GDP growth rate, is the world's sixth fastest growing economy. India is a $1.5-trillion economy. The India growth story is enviable. Despite plaguing problems, India has emerged stronger and resilient to the global crisis so far. India is expected to be the world's fastest growing economy by 2018, according to Economist Intelligence Unit (EIU), the research arm of the Economist magazine. The growth rate for the first quarter was revised upwards to 8.9 per cent from 8.8 per cent.


7. Angola: 8.251%
Angola is the world's seventh fastest growing economy at a GDP growth rate of 8.251 per cent, as per the Economy Watch report. It is a $ 99-billion economy. Battered by a civil war for close to 25 years, Angola has since then come a long way. Fresh pro-people and pro-reform policies have seen funding from the International Monetary Fund and other global lenders rising. These funds are being utilized to create infrastructure in the nation, thus generating employment and healthy economic activity.


8. Iraq: 7.873%
Iraq is growing at 7.873 per cent, making it the world's eighth fastest growing economy, according to Economy Watch. It is a $93-billion economy.


9. Ethiopia: 7.663%
Economy Watch says that with an annual GDP growth rate of 7.663 per cent, Ethiopia is the world's ninth fastest growing economy. It is a $31.7-billion economy. Over the last two decades, Ethiopia has been noticing the fruits of focused efforts at propelling its economy. Some reforms were undertaken in spite of opposition from various political quarters in the country.


10. Mozambique: 7.548%
Mozambique, a member of the Southern African Development Community, is the world's 10th fastest growing economy with a GDP growth rate of 7.548 per cent. It is a $10.5-billion economy. The SADC free trade plan aims at eliminating tariffs and trade barriers, thus making it more competitive.
Like in India, a majority of the population in Mozambique too is engaged in the agriculture sector.


11. Timor Leste (East Timor): 7.4%
Timor Leste (or East Timor) is the world's eleventh fastest growing economy with an annual GDP growth rate of 7.4 per cent. It's a tiny, $732-million economy.East Timor's economy is mainly driven by the sectors of agriculture and oil and gas.


12. Laos: 7.395%
The GDP growth rate of Laos is 7.395 per cent, making it the world's 12th fastest growing economy. It is a $6.9-billion economy. Agriculture is the most important part of the Laotian economy. Over 80 per cent of the country's working people are engaged in the agri sector. The sector also accounts for about 50 per cent of the nation's GDP.

Source :Rediff business

How did the sub-prime crisis become such a huge global crisis?

The Sub-prime crisis is a 2007 financial crisis that started in the United States of America from the high number of defaulting borrowers with sub-prime mortgages.

During the high demand period for housing loans in the US, when the real estate sector was booming, people with a bad credit history, and a higher chance of defaulting on their payments, were providedloans at higher-than-normal interest rates (sub-prime rates). Problems in the sub-prime market began to arise as these sub-prime borrowers that did not have the capacity to repay the loan.

The elevated risks that financial institutions were taking with sub-prime mortgages in the USA began to create problems towards the end of 2006. Borrowers began to default on their loans in higher numbers,which created a global credit crisis. Central banks were forced to inject money into financial markets, more than one hundred sub-prime lenders in the United States collapsed, leading to decline in US economic activity and global economic growth was expected to slow.

A decline in economic activity in theUS resulted in lower disposable incomes and hence a decline in demand. People who were not able to pay back their Loans, lost their homes to financial institutions,which were not able to sell it in the Open markets to recover the amount lended, as the property rates had fallen tremendously due to an oversupply. This triggered the sub-prime crisis.

The world was hit by the heat of the US sub-prime crisis. It was initially thought by some that other major world economies would not be significantly affected. While the sub-prime mortgage meltdown was mostly an American problem, financial markets around the world have been affected by it either directly or indirectly, on account of US being the largest economy.

Source : Multiple

A real life case from Global Economic Crisis

Ripple Effect of the Subprime crisis

•   The effects of the US Subprime Mortgage crisis on the global market were huge. The crisis had ripple effect on the Asian, European as well as the Australian market.

•  The Asian market witnessed a massive sell off. It also has hit the stock markets of Australia, Germany and Thailand such that BNP Paribas had to hold all it withdrawals and IKB Deutsche had to seek a bailout of $11.1 billion.

•    Post the housing bubble burst in US the underlying mortgage defaults increased which affected adversely the global markets.

•    In the Great Britain, the stock market experts failed to realize the underlying faults and WestLB had to file bankruptcy.

•    One of the giant of Australian financial services Macquarie Bank, declared that the investors may lose 25% of their money.

•   The Nikkei stock average in Japan has decreased by more than 2%.

•   In Germany, France and Britain major indexes have fallen down, but by less than 2%.

•    Australia and Hong Kong's benchmark indexes have fallen down by above 3%.

•    South Korea's key index has dropped by 4%.

•   The First State Investment had withdrawn its entire share from the Asian financial market.

  

Source: Multiple

                               

                               

Lehman Brothers & The Great Wall Street Fall

September 15, 2008 was recorded as a Black Day in history of American Economy, as world’s 4th largest Investment Banking firm “Lehman Brothers” filed for bankruptcy leaving 25000 employees worldwide in absolute dismay.
With $639 billion in assets and $619 billion in debts making it the largest victim of the “Subprime crisis”. Lehman's collapse was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of close to $10 trillion in market capitalization from global equity markets in October 2008, the biggest monthly decline on record at the time.


The Prime Culprit
In 2003 and 2004, with the U.S. housing boom well under way, Lehman acquired five mortgage lenders, including subprime lender BNC Mortgage and Aurora Loan Services, which specialized in Alt-A loans (made to borrowers without full documentation). Lehman's acquisitions at first seemed prescient; record revenues from Lehman's real estate businesses enabled revenues in the capital markets unit to surge 56% from 2004 to 2006, a faster rate of growth than other businesses in investment banking or asset management. The firm securitized $146 billion of mortgages in 2006, a 10% increase from 2005. Lehman reported record profits every year from 2005 to 2007. In 2007, the firm reported net income of a record $4.2 billion on revenue of $19.3 billion.


Lehman's Colossal Miscalculation
In February 2007, the stock reached a record $86.18, giving Lehman a market capitalization of close to $60 billion. However, by the first quarter of 2007, cracks in the U.S. housing market were already becoming apparent as defaults on subprime mortgages rose to a seven-year high. On March 14, 2007, a day after the stock had its biggest one-day drop in five years on concerns that rising defaults would affect Lehman's profitability; the firm reported record revenues and profit for its fiscal first quarter.


The Beginning of the End
As the credit crisis erupted in August 2007 with the failure of two Bear Stearns hedge funds, Lehman's stock fell sharply. During that month, the company eliminated 2,500 mortgage-related jobs and shut down its BNC unit. In addition, it also closed offices of Alt-A lender Aurora in three states. Even as the correction in the U.S. housing market gained momentum, Lehman continued to be a major player in the mortgage market. In 2007, Lehman underwrote more mortgage backed securities than any other firm, accumulating an $85-billion portfolio, or four times its shareholders' equity. In the fourth quarter of 2007, Lehman's stock rebounded, as global equity markets reached new highs and prices for fixed-income assets staged a temporary rebound. However, the firm did not take the opportunity to trim its massive mortgage portfolio, which in retrospect, would turn out to be its last chance.
Lehman's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. Many questioned the U.S. government's decision to let Lehman fail, as compared to its tacit support for Bear Stearns (which was acquired by JPMorgan Chase) in March 2008. Lehman's bankruptcy led to more than $46 billion of its market value being wiped out...So was only Subprime Mortgage responsible for this colossal loss or there was more to it?


Source: Economist, Investopedia and Anatomy of Froth (Swapnil Pawar)

India ranks among the top destinations for global equity investors!

When it comes to global fund flows, India easily ranks among the top destinations for global equity investors, who have pumped in a record net $29 billion so far in 2010.

STV is the ratio of traded turnover to market capitalization and a high ratio signifies better liquidity. Globally, investors are attracted to markets with a high STV, as it means a lower impact cost. Again, impact cost is the deviation from the ideal price that an investor would have otherwise paid for buying or selling a stock. This happens when the ‘buy’ or ‘sell’ order is large compared with the trading volume in the stock.

Experts attribute factors like concentration of trading in a few companies, high-promoter holding and low retail participation in India to this trend. STV for the NSE and BSE stood at around 60% and 20%, respectively, this year, compared with over 100% for stocks in Australia , Korea, Shanghai, Shenzhen, Taiwan and Tokyo, among others , according to data by World Federation of Exchanges (WFE).

India is still in many ways in the first wave of entrepreneurship due to which promoter holding is very high. Also, large number of fresh issuances is leading to increase in market cap but low turnover.

The impact of STT and low arbitrage opportunities has kept the high volume creators and arbitrageurs away from the market and unavailability of single tick-data does not allow for high frequency trading,” he said. Promoter shareholding in India is over 50% in the Indian market, compared with 10-15 % in countries like the US.

Source :ET

Karvy Private Wealth - Platinum sponsor of a SiliconIndia leadership summit

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India third most powerful nation says the US report

India is listed as the third most powerful country in the world after the US and China and the fourth most powerful bloc after the US, China and the European Union according to a new report released in US.

In 2010, the US tops the list of powerful countries/regions, accounting for nearly 22% of the global power.

The US is followed by China (more than 12%), European Union (more than 12%), India (nearly 8%). India is followed by Japan, Russia and Brazil with less than 5% each.

According to this international futures model, by 2025 the power of US, EU, Japan and Russia would decline while that of China, India and Brazil would increase, even though there would be no change in this listing. By 2025, the US would still be the most powerful country of the world, but it would have a little over 18% of global power. The US would be closely followed by china (nearly 16%), EU (14%) and India (10%).

Source: TOI