This paper discusses the challenges and relationships that emerging markets face in this current period of global volatility, the need for Development Finance Institutions to full the funding gap between public and private investment and the various factors that are in play that influence emerging market growth.
Emerging markets have long been seen as the key driver of economic growth in the global economy. The reason is that due to their smaller GDPs, they can achieve faster growth than developed markets. In order to achieve this growth, emerging markets need development and infrastructure finance.
However, emerging markets are currently experiencing stagnation, as they become the first to suffer when volatility hits the market and risk averse investors flee to safer shores.
This paper aims to highlight the causes of the inverse relationship between investment in emerging markets and periods of volatility globally. Volatility is defined as the effect of the US Federal Reserve interest rate and the US government bond yields on global markets.
This paper also looks at emerging market investment cycles and what steps can be taken to ensure the investment in emerging markets becomes more robust and less sensitive to volatility pressure, as well as the future of Brexit.