Editor’s Letter: Out Of The Woods?

Dear Reader

September 2009 | Vol. 23 No.8

Dan Keeler


It is entirely fitting that 2009, the 150th anniversary of the publication of the Charles Darwins On the Origin of Species, should turn out to be a particularly Darwinian year. In the financial world, the carnage of the past two years has triggered a shake-out that the fittest have not only survived but have thrived on. And the less fit financial institutions? They became lunch.

The same Darwinian struggle is playing out among the worlds economies. As we find out in our cover story this month, the emerging markets have shown themselves to be among the fittest. While the UK, for example, has seen its economy foundering in an on-again, off-again recovery and other Western European nations are mired in the swampy aftermath of the financial meltdown, many of the emerging markets are powering ahead once more. Growth numbers coming out of China, India and Brazil are closing in on their pre-crisis highs and investors worldwide are scrambling to pour money into emerging markets as a whole.

The recoveryand remarkable growthin emerging markets is hardly universal, though. As we document in our regional report on page 21, countries in the former Soviet Union that founded their breathtaking economic expansion earlier this decade on mountains of debt crashed hard in the credit crunch and are still in terrible shape. In stark contrast, the Asian tiger economies whose modern form was forged in the crucible of the 1997 Asian crisis, have proved much more robust. It is the lessons they learned during that crisisand the often painful structural changes they enacted as a resultthat have helped Asias developing economies weather the storm. With their vast, youthful populations hungry for economic growth, they are now in a position to leave the Western economies and their aging populations in the dust.

It is still far too early to say whether the global economy is out of the woods but as activity begins to return to normalor at least less depressed levelsit is already becoming clear which economies are the fittest. But the question remains: Which will become lunch?

Until next month.