Enthusiasm for Emerging Europe

Asia’s rapid growth hogs the emerging-markets spotlight, but Russia and the other countries of Emerging Europe (EE) also deserve some attention. For starters, EE economies have tight fiscal policies and are carrying far less debt than many developed economies, both positives for sustained economic growth. In the chart above, the best place to be is in the southeast quadrant, and that’s where EE nations are clumped. Russia’s debt position is minimal and there is ample strength in the consumer sector going forward. In January 2010, wages were up 11 percent from a year ago to 19,000 rubles per month. This has kept domestic consumption levels around 65 percent—on par with Brazil and above both China (30 percent) and India (57 percent). In addition, Russia’s oil production—the country’s main profit center—came through the crisis more robust than many expected, even surpassing Saudi Arabia in terms of production. But Russia is looking beyond oil and gas. In February, Time magazine reported that President Dmitri Medvedev has ambitious plans to create a high-tech haven where geniuses can think up world-changing inventions. The intellectual capital is there. Despite years of exodus of scientists and engineers from the Soviet bloc during the 1990s, the chart above from Dr. Marc Faber shows the combined number of researchers in Russia and its former satellite states in Emerging Europe is not far behind the United States and China and is many times ahead of Brazil and India.

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