Developed nations are picking up the slack for global economic growth, a reversal of past years in which emerging markets led the way, the chief economist of research firm IHS said at a conference Tuesday that included oil and gas industry leaders.
Nariman Behravesh’s outlook suggested that the U.S., Japan, Germany and the United Kingdom will be the bellwethers for the strength of the world economy for the foreseeable future.
Growth in U.S. energy production has helped provide the stimulus for the paradigm shift, he said.
“Five years ago, nobody thought this would happen, but it is happening,” Behravesh told a crowded auditorium of conference attendees at a West Houston hotel.
Previously, emerging markets such as China, India and Brazil led global economic growth, he said. But a series of factors, including long-standing government structural issues, have caused a sea change.
He also said that U.S. Federal Reserve Chairman Ben Bernanke’s comments in May suggesting that the U.S. may start to scale down its bond buying program has had global ramifications, especially in emerging markets.
Behravesh said emerging markets have been hit hard by rising bond yields and falling currencies.
“All of this will dampen growth further,” he said. “It’s a bit of a problem.”
As far as structural issues, Behravesh said that in emerging markets, the state still plays too big of a role in the country’s economy, stifling growth prospects.
“As the developed economies recover, these markets may have to compete harder for funds,” he said.
Overall, Behravesh said the stage is set for a modest recovery in the global economy, but it will be driven by developed nations, which he referred to as “dull old” economies.
“The U.S. has been hit with a lot of shocks,” he said. “Despite this, we have kept going, and that is a legacy of the strength of this economy.”