Chartwell Global ETF Report

While India and China economic growth translates into strong performances by exchange-traded funds such as MSCI China iShare (FXI) and the Morgan Stanley India ETF (IIF), it also helps to support global growth.

The Economist highlights this positve trend and likens it to a jet with multiple engines. Emerging markets as a whole will account for more than 50% of world GDP growth in 2007 and fully 30% of total world GDP. In addition, emerging market countries represent 85% of the world's population.

It is indeed good news that the world has found some powerful new engines in China and other emerging economies. Even as turbulent credit markets potentially trim American markets and even perhaps its voracious consumers, global growth is less dependent on the United States and is more likely to stay aloft.

The Economist article goes on to describe the power of this new motor which is powerful and hopefully enduring. For several years, emerging Asian economies have accounted for more of global GDP growth than America has and this trend, with the exception of Japan, is accelerating. In addition, this year China alone will for the first time accomplish the same feat all on its own (at market exchange rates), even if American growth holds up.

American consumer spending is roughly four times the size of China's and India's combined, but what matters for global growth is the extra dollars of spending generated each year. In the first half of 2007 the increase in consumer spending in China and India together contributed more to global GDP growth than the increase in America did. Now if America can only gain access to these growing lucrative markets, trade imbalances may disappear.