The emerging markets have accumulated massive currency reserves. The export boom in Asian emerging markets, coupled with soaring commodity prices, facilitated this buildup of liquidity.

The positive Constitutional Court ruling for the government and the AKP removes considerable uncertainty from the country. The economy will benefit from this. Other challenges remain, e.g. the international capital markets have hit choppy waters in the wake of the subprime crisis in the US. How will Turkey accomplish the balancing act between the tricky domestic political situation and the confidence of international investors upon which it relies given its substantial foreign capital requirements?

“The industrial countries suffer from high oil prices, whereas the emerging markets benefit.” This thesis does not match reality as most emerging markets have to import oil.

High inflation rates are plaguing not only the industrial countries but the emerging markets as well. Indeed, the latter suffer even more as oil and food, the main drivers of prices, both play a particularly significant role in private spending. What impact will inflation have on these countries?

After years of major successes on the economic front – high growth, budget surpluses and a buildup of currency reserves – South Africa is now heading for choppier waters again. But the emerging economic slowdown and the weak rand provide an opportunity to return to a more balanced growth path.

The financial market wobbles have now also reached the emerging markets. Equities, currencies and risk spreads are coming under pressure. How will the emerging markets cope with the current trends on the international capital markets?

The strong growth seen in the emerging markets in recent years is set to continue in the medium term. For the period 2008 to 2012 Allianz Dresdner Economic Research expects average annual economic growth of 6 % in the emerging markets. The main factors driving growth remain the healthy expansion in world trade, foreign direct investment and high commodity prices. Few successful exporters or investors can now afford to ignore the emerging markets: the uncurbed economic momentum will push up their share in world GDP from 24 % in 2006 to 31% in 2012.

Globalization is not a one-way street. The emerging markets, hitherto associated solely with capital recipients, are now increasingly entering the stage as cross-border investors – also in Latin America.

India has caught up with Far Eastern growth momentum. For several years now the economy has been recording dynamic and strong growth. There are many factors to suggest that India will remain on a clearly upward growth path in the longer term. The sub-continent enjoys the second highest growth potential in the world, after China. India is on its way to becoming a significant economic power.

External economic shocks, such as a recession in the USA or a steep rise in interest rates, would hit the emerging markets far less severely than just a decade ago.

Given soaring oil prices, Russia’s successes on the export front are not particularly surprising. What is surprising, however, are the large trade and current account surpluses given that Russia desperately needs substantial imports of capital goods to cover its investment needs.

High growth rates, broadly stable prices and dynamic external trade will characterize the economic situation in the emerging markets in the coming years.

Together with gloomy company news, the Federal Reserve's 25 basis point interest rate hike of 22 March 2005 caused something of a stir in the emerging markets. However, the expected slowdown in the global economy will not catch the emerging markets unprepared.

Emerging market currency reserves at record level.