Why So Many See 2013 As Breakthrough Year For Emerging Markets

Some skeptics, though, wonder whether all the enthusiasm for the developing world has created a sort of emerging market "bubble".

Keep on moving in Mumbai
Keep on moving in Mumbai
Daniel Eckert and Holger Zschäpitz

BERLIN - The downfall of the West has been predicted many times – and then always postponed. Ninety years ago, Oswald Spengler in his book, “Decline of the West” wasn’t the first to announce it and he certainly wasn’t the last.

Now there is more fodder for “declinists,” as they are known – from the economic sector. Some time during the course of this year, the industrial nations will for the first time account for less than half of the world production. For many observers, that will make 2013 a historic turning point.

While the old West is losing economic influence, heavily populated countries like China, Brazil, India and Indonesia are rising. And just behind these future powers, strong-growth nations like Mexico, Pakistan and Turkey are also powering forward.

Hedge funds and other major investors are already adjusting to this paradigm change, although private investors lag behind. For the moment, Germans have invested less than 10 billion euros – 4% of the capital in equity funds – in emerging country funds.

Measured against their economic clout, emerging countries are under-represented on the world’s stock markets. Although they account for over half of the world’s gross domestic product (GDP), their equity markets together are only worth $13.6 trillion. That’s a quarter of the global market value of $53.5 trillion. By way of comparison, Wall Street alone puts $17.3 trillion on the scales.

There are good reasons to believe that emerging markets will continue to grow. One is that 86% of the world’s population lives in the non-industrialized nations.

The currency reserves of these emerging countries is also impressive – presently two-thirds of total global reserves of $10.8 billion. China, Brazil and Russia alone are sitting on over $4 trillion worth.

That’s leverage – emerging market governments can use these reserves in crisis situations, to defend their own currency or in the event of a currency war to influence global capital markets.

Also speaking for the emerging markets is their low debt – the 70 emerging countries listed by ratings agency Fitch show on average debt of only 39% of GDP. The 30 developed markets on the other hand show 76%. The U.S. alone accounts for $16.4 trillion of the debt.

Less social spending also works in favor of the emerging countries, although many Western critics condemn this as unfair competition and social dumping.

Strategists at asset management firm BlackRock say that from the investor’s perspective there are many arguments for investing in emerging markets not least that growth potential over years – decades – is higher.

The main reason for this is that the population of the former Third World countries is growing faster than in the aging industrial countries. In addition, productivity in most emerging countries is growing faster too, albeit at a much lower level.

China dynamo

Although China is the world’s second largest economy, most economists are saying that growth this year will only be 7.5% to 8%. In total, emerging countries are likely to grow by 4.5% this year, although the emerging Asian countries are expected to grow most strongly at 6%. Latin America can expect a growth rate of 3.5%. By contrast, the euro zone economies will on average shrink by about 0.3% in 2013.

Brazil, in sixth place, has already overtaken the mother country of industrialization – the United Kingdom. In 1913 the Brazilian economy was not even a tenth of the size of the UK economy.

The term “emerging markets” was coined in the late 1970s by Antoine van Agtmael, an economist at the World Bank’s International Financial Corporation.

Before that, money managers who explored opportunities in these regions, spoke of investing in the Third World or in “underdeveloped countries” – which understandably didn’t spark much enthusiasm from investors. One of the first back then to recognize a megatrend was Tom Hansberger, formerly with the U.S. Air Force, who together with American investor John Templeton set up the first emerging market funds.

Yet as late as 1987 the stock market value (market capitalization) of all emerging market stocks was only 332 billion euros. That corresponded to 5% of worldwide market capitalization of 7.8 trillion euros. At first, emerging market products were difficult to place and only appealed to a small, elite circle of investors.

But things changed in the 1990s – emerging markets became fashionable. A steadily growing number of funds were garnering more and more investor capital. By 1996, emerging market equities totaled $2.2 trillion – 11% of world market capitalization of $20.2 trillion.

Then came a major setback. In the Asian crisis in 1997, it became apparent that not all growth models were sustainable. At the height of the exultation before the crash, some of the “tiger economies” were consuming more than they were producing. Previously popular emerging stock market, such as Bangkok crashed, losing 80% in a year.

In today’s enthusiasm for emerging markets there are a few pessimists, like John Higgins, a Capital Economics markets economist, who worries emerging market bonds have become a financial bubble.

Ian Bremmer, the president of political risk firm Eurasia Group, has even put emerging markets on the top of his list of 2013 "global risks." He says that emerging markets investors have become too uncritical, and have tuned out to issues like lack of political stability in some countries. More to the point, he says, "emerging countries" should not be viewed as a group, but rather analyzed individually.

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Where Lockdowns For LGBTQ Meant Moving Back In With Homophobic Relatives

The confinement experience could turn brutal for those forced to live with relatives who would not tolerate a member of the family living their sexual orientation openly as a young adult. Here are stories from urban and rural India.

At a Rainbow pride walk in Kolkata, India

Sreemanti Sengupta

Abhijith had been working as a radio jockey in the southern Indian city of Thiruvananthapuram when the COVID-19 pandemic hit in March, 2020. When the government imposed a nationwide lockdown, Abhijith returned to the rural Pathanamthitta district , where his parents live with an extended family, including uncles, cousins and grandparents.

Eighteen months later, he recalled that the experience was "unbearable" because he had to live with homophobic relatives. "Apart from the frequent reference to my sexual 'abnormality', they took me to a guruji to 'cure' me," Abhijith recalled. "He gave me something to eat, which made me throw up. The guru assured me that I was throwing up whatever 'demon' was possessing me and 'making' me gay."

Early in 2021, Abhijith travelled back to Thiruvananthapuram, where he found support from the members of the queer collective.

Inspired by their work, he also decided to work towards uplifting the queer community. "I wish no one else goes through the mental trauma I have endured," said Abhijit.

Abhijith's story of mental distress arising from family abuse turns out to be all too common among members of India's LGBTQ+ community, many of whom were trapped in their homes and removed from peer support groups during the pandemic.

Oppressive home situations

As India continues to reel from a pandemic that has claimed more lives (235,524) in three months of the second wave (April-June 2021) than in the one year before that (162,960 deaths in March 2020-March 2021), the LGBTQ community has faced myriad problems. Sexual minorities have historically suffered from mainstream prejudice and the pandemic has aggravated socio-economic inequalities, instigated family and institutionalized abuse, apart from limiting access to essential care. This has resulted in acute mental distress which has overwhelmed queer support infrastructure across the country.

Speaking to queer collective representatives across India, I learned that the heightened levels of distress in the community was due to longstanding factors that were triggered under lockdown conditions. Family members who are intolerant of marginalized sexual identities, often tagging their orientation as a "disorder" or "just a phase", have always featured among the main perpetrators of subtle and overt forms of violence towards queer, trans and homosexual people.

Calls from lesbians and trans men to prevent forced marriages during lockdowns.

Sappho For Equality, a Kolkata-based feminist organization that works for the rights of sexually marginalized women and trans men, recorded a similar trend. Early in the first wave, the organization realized that the existing helpline number was getting overwhelmed with distress calls. It added a second helpline number. The comparative figures indicate a 13-fold jump in numbers: from 290 calls in April 2019-March 20 to 3,940 calls in April 2020-May 2021.

"Most of the calls we have been getting from lesbians and trans men are urgent appeals to prevent forced marriages during lockdowns," said Shreosi, a Sappho member and peer support provider. "If they happen to resist, they are either evicted or forced to flee home. But where to house them? There aren't so many shelters, and ours is at full capacity."

Shreosi says that the nature of distress calls has also changed. "Earlier people would call in for long-term help, such as professional mental health support. But during the pandemic, it has changed to immediate requests to rescue from oppressive home situations. Often, they will speak in whispers so that the parents can't hear."

Lack of spaces

Like many of his fellow queer community members, life for Sumit P., a 30-year-old gay man from Mumbai, has taken a turn for the worse. The lockdown has led to the loss of safe spaces and prolonged residence at home.

"It has been a really difficult time since the beginning of the lockdown. I am suffering from a lot of mental stress since I cannot freely express myself at home. Even while making a call, I have to check my surroundings to see if anybody is there. If I try to go out, my family demands an explanation. I feel suffocated," he said.

The pandemic has forced some queer people to come out

Sumit is also dealing with a risk that has hit the community harder than others – unemployment and income shortage. He's opened a cafe with two other queer friends, which is now running into losses. For others, pandemic-induced job losses have forced queer persons from all over the country to return to their home states and move in with their families who've turned abusive during this long period of confinement.

Lockdowns force coming out

According to Kolkata-based physician, filmmaker and gay rights activist Tirthankar Guha Thakurata, the pandemic has forced some queer people to come out, succumbing to rising discomfort and pressure exerted by homophobic families.

"In most cases, family relations sour when a person reveals their identity. But many do not flee home. They find a breathing space or 'space out' in their workspaces. In the absence of these spaces, mental problems rose significantly," he said.

Not being able to express themselves freely in front of parents who are hostile, intolerant and often address transgender persons by their deadname or misgender them has created situations of severe distress, suicidal thoughts and self-harm.

Psychiatrist and queer feminist activist Ranjita Biswas (she/they) cites an incident. A gender-nonconforming person died under suspicious circumstances just days after leaving their peer group and going home to their birth parents. The final rites were performed with them dressed in bangles and a saree.

"When a member of our community asked their mother why she chose a saree for someone who had worn androgynous clothes all their life, she plainly said it was natural because after all, the deceased 'was her daughter,'" Biswas recalls.

The Indian queer mental health support infrastructure, already compromised with historical prejudice, is now struggling

David Talukdar/ZUMA

"Correctional" therapy

In India, queer people's access to professional mental healthcare has been "very limited," according to community members such as Ankan Biswas, India's first transgender lawyer who has been working with the Human Rights Law Network in West Bengal.

"A large majority of the psychiatrists still consider homosexuality as a disorder and practice 'correctional therapy'. It's only around the big cities that some queer-friendly psychiatrists can be found," Biswas said. "The pandemic has further widened the inequalities in access to mental health support for India's LGBTQ community."

Biswas is spending anxious days fielding an overwhelming amount of calls and rescue requests from queer members trapped in their homes, undergoing mental, verbal and even physical torture. "We don't have the space, I just tell them to wait and bear it a little longer," he said.

Medical care is dismal

Anuradha Krishnan's story, though not involving birth family, outlines how the lack of physical support spaces have affected India's queer population. Abandoned by her birth family when she came out to them as a trans woman in 2017, Anuradha Krishnan (she/they), founder of Queerythm in Kerala who is studying dentistry, had to move into an accommodation with four other persons.

Isolation triggered my depression

"I am used to talking and hanging around with friends. Isolation triggered my depression and I had to seek psychiatric help." Living in cramped quarters did not help with quarantine requirements and all of them tested positive during the first wave.

What is deeply worrying is that the Indian queer mental health support infrastructure, already compromised with historical prejudice, is now struggling, placing more and more pressure on queer collectives and peer support groups whose resources are wearing thin.

During the 10 months of the first wave of the pandemic in India in 2020, Y'all, a queer collective based in Manipur, received about 1,000 distress calls on their helpline number from LGBTQ+ individuals. In May 2021 alone, they received 450 such calls (including texts and WhatsApp messages) indicating a telling escalation in the number of queer people seeking help during the second wave.

As India's queer-friendly mental health support infrastructure continues to be tested, Y'all founder, Sadam Hanjabam, a gay man, says, "Honestly, we are struggling to handle such a large number of calls, it is so overwhelming. We are also dealing with our own anxieties. We are burning out."

Sreemanti Sengupta is a freelance writer, poet, and media studies lecturer based in Kolkata.

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