There was an informative piece in the NZ Herald on Saturday which alluded to the fact that, according to PWC, the emerging economies’ banking sectors are expected to outgrow those in the developed economies by an even greater margin than what was thought.
By 2036 (see graph below) the banking assets and profits of the the E7 countries are expected to exceed those of the G7 countries. One of the main reasons for this was that the emerging economies were not as exposed in the financial crisis to the alphbet soup of investment vehicles – CDO’s, CDS’s etc. Also their banking systems are in a much more stable condition to fund long-term growth within their countries. The table shows projections of when emerging economies will overtake other G7 countries. PWC project that India could become the third largest domestic banking structure by 2050 after China and the US, but ahead of Japan, the UK and Germany.
E7 = China, India, Brazil, Russia, Mexico, Indonesia, Turkey
G7 = US, Japan, Germany, UK, France, Italy, Canada