As stock markets tumble and the pound slumps to a one-year low against the US dollar, it is hard not to take fright at the gloomy warnings about the world economic outlook coming from almost every major central bank and multilateral institution.
 
Opinion differs over whether or not we are heading for a worldwide recession, or even whether the euro can survive. But it is clear that prospects in the developed world are markedly darker than in the emerging markets which, despite being vulnerable to a European and American recession, do at least have domestic strengths as a partial offset to weakness abroad.

Interestingly, the problems in Europe and America do not necessarily translate into problems at the corporate level. Indeed, many businesses we work with are financially strong. Most companies didn’t borrow very aggressively during the good times, and so aren’t nursing big debts now. The source of economic weakness at the moment is individuals and governments – both of which are highly indebted and trying to retrench.

So where does that leave businesses? Many of our clients are still keen to invest. But deciding where to direct those investments is difficult. Demand in rich countries will remain sluggish for some years, and the economic centre of gravity will continuing to shift east. Yet emerging markets can be risky and operating conditions tough. How can western firms manage these factors and position their businesses for a world in which emerging market demand becomes a significant, maybe the most significant, revenue stream?

At the same time, emerging market businesses are not standing idle. Multinational Companies (MNCs) from emerging markets have been expanding and acquiring foreign companies and resources at a rapid pace in recent years. A few have become household names across the world, although most are still relatively little known. That, however, is bound to change, and western MNCs will find that they are battling developing world businesses not just in China or Brazil, but also in America or Europe. How will western business cope with this new challenge?

I will be speaking at the High-growth Markets about these issues later this week. Why not join us? You can find further information on the event, programme and speakers here