A new study commissioned by Danske Capital analyses the growth prospects of emerging markets economies in Europe. The study is carried out by the independent research institution ETLA, The Research Institute of the Finnish Economy. The main findings from an investor’s perspective are listed below.
- The convergence towards EU-15 means that Eastern European countries enjoy a higher level of investment growth and faster productivity growth thereby rendering high economic growth sustainable and creating attractive equity investment opportunities.
- Convergence is not an automatic process, however. Political stability, education and growth-oriented policies can positively influence the process. EU will provide most countries with this stability and encourage a growth-oriented environment through increased foreign direct investments (FDI).
- By 2030 Eastern Europe is estimated to account for 41% of total European GDP compared to 27% today and to further increase to 44% in 2050. The potential EU-members are forecasted to increase their percentage of EU-15 GDP from 19% today to 41% in 2050. A share of 41% exceeds Great Britain and Germany’s contributions to EU-15 GDP today.
- With the EU serving as an anchor for political stability, Eastern Europe does not have the same risk characteristics as those of the Emerging Markets in Latin America and Asia, where the convergence process is less obvious than in the EMEs.
- The report shows that return on capital will be higher in the EMEs than in the EU-15 countries. The EMEs' higher return on capital and appreciating currencies will constitute attractive investment opportunities.
Download the white paper EME Report (PDF: 275kb: 4 pages)
Download the full study report from ETLA (PDF: 600kb: 51 pages)