Just a few years ago, investment bankers were bullish on emerging markets, which they saw as undervalued and bound to rise. And yet, after experiencing a minor recovery, growth rates in Latin America, the former Soviet Union, the Middle East and Africa are settling back into a state of near-stagnation. In this regard, Russia is a pioneer, having registered no real growth since 2014.
According to an old Soviet saying, agriculture suffers from four problems: spring, summer, fall and winter. Following the same logic, Russian President Vladimir Putin blames “outside forces” — not least global oil prices — for his country’s doldrums, even though unsound economic policies and Western sanctions are no one’s fault but his own.
It is no accident that there has been an economic divergence in Central and Eastern Europe. Those countries that have joined the European Union have improved their economic governance and GDP has begun to converge with Western Europe. Between 2014 and 2019, Hungary, Poland and Romania grew at an annual average rate of 3.9%, 4.1% and 4.7%, respectively.