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Tuesday, September 21, 2010

Ethiopia: African countries may garner an increased focus for investors as their economies grow consistently at more than 7% a year


Source: The Street
Ethiopia, Tanzania, Uganda and other African countries may garner an increased focus for investors as their economies grow consistently at more than 7% a year, John Calverley, head of thematic research at Standard Chartered, told Bloomberg News.

Standard Chartered released a publication in which it identified countries in the so-called 7% Club. The report came after another survey showed that investors are putting more money in emerging economies than in developed nations such as the U.S.
While Brazil and Mexico still have the potential to grow more than 7% a year, "there's a lot of interest in the frontier markets and there could be a lot of opportunities," Calverley said. The "usual suspects" recording fast economic growth are in Asia, including Vietnam and Cambodia, he said. But African nations are the newcomers, he said.

Calverley said investors may be focusing too much on so-called BRIC countries -- Brazil, Russia, India and China. Russia, for example, has slowed dramatically, and China's pace of economic growth has also flagged somewhat, he said.

"If you're a large country but growing slowly, like Russia, you could be easily overtaken by a smaller country," Calverley said. We'd like to focus on growth rather than sheer size." Growth of 7% means a country's economy will double in 10 years.

As for the U.S., the economy may grow as little as 1% to 2% until the end of 2011, an inflation will "definitely" stay below 1% in the next six months, Calverley said. He's said he's not expecting a double-dip recession. The recession ended in June 2009, economic-research firm NBER said yesterday. It began at the end of 2007.

Still, "the Fed will come in to do more quantitative easing at some point," Calverley said.

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