Emerging markets in upheaval
The trade conflict between the USA and China has had a dampening effect on world growth in recent months. World trade has been stagnating or falling for some time now. Countries whose growth model depends heavily on exports and thus on foreign demand are negatively affected by this development. The pace of growth in these countries, such as Germany, has slowed significantly.
Of course, this is not just a problem in the industrialized countries. The once celebrated emerging markets are also suffering from this development. The strong dependence on world trade has also become a problem here. The slowdown in growth and the associated unfavorable effects on the labor market and tax revenues are putting structural weaknesses, corruption and social inequality in the countries back in the limelight. The growing dissatisfaction of the population can no longer be limited or even resolved by a promise of prosperity. As a result, social pressure and political instability are increasing in many emerging markets.
The emerging markets deal with this situation in different ways. However, political instability is on the rise. This has not yet been properly perceived, as the main focus has been on the political and economic situation in China. However, the effects of social and political change are becoming increasingly apparent and political costs are correspondingly greater. In the medium term, however, this should not go unnoticed.
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