Economic Expert Says the Key to Creating Growth for Multinationals Post-Crisis Is to Focus on Core Business and Expand Their Global Footprint

In a recent Reuters interview that was featured in UK’s The Guardian, the founder and president of the Krull Corporation, Dr. Alexander Mirtchev (Александр Мирчев), discussed the impact of the global economic slowdown and the financial crisis on the growth potential of major multinationals, in particular in the emerging markets.

“Despite the fact that multinationals generate the majority of their total revenues from developed economies, emerging markets could provide the all-too-necessary upside that may be the difference between success and failure during the crisis, its fallout and, most importantly, in the positioning for recovery,” he said.

“Granted that the pressure on all emerging markets is similar – dealing with the global slowdown in demand and the credit crunch, overexposure to major currencies and commodities price fluctuations, in a number of casesoverleveraging and budget deficits among other things — they are by nomeans a ‘single class of assets,’ and are going to act and react differently, and reach distinctly separate outcomes. From China to Chile, emerging market economies are equipped with specific advantages that would affect multinationals’ decision-making process — large reserves, greater access to natural resources, or access to new avenues and options to deal with the crisis as part of the EU,” he indicated. “In addition, in these interventionist times, some are more agile, easier to ‘manage’ from the top, and can adjust more quickly to the crisis, provided their governments have the necessary political will and wherewithal,” stated Mirtchev.

According to Dr.Mirtchev, multinationals such as GE should not succumb to growing financial pressures, but should rather “stay the course, and approach local turbulences as part of any systemic business problem that will be around for a while.” The upside is that “even though these markets are not decoupled from the world economy and will slow down further, significant segments of these markets are placed to do better in comparison with the rest of the world.”

Secondly, “these markets can not only provide a certain offsetting counterweight to the impact of the downturn on multinationals’ bottom line,but, significantly, are the markets via which multinationals should growtheir global footprint looking beyond the recession,” he indicated.

That is to say that multinationals should utilize the relatively positive-looking segments of markets, such as China, India, Brazil, and even Russia, despite its own economic travails, etc., to partially offset the effect of the slowdown elsewhere, and, most importantly, to provide themselves with a springboard for further regional and global growth. An eventual recovery is inevitable and appropriate positioning today is critical to tomorrow’s success.

The Reuters article with Dr.Mirtchev was published in the United Kingdom’s Guardian newspaper and can be viewed in its entirety at: “Emerging markets lend some support to GE outlook.”

Several interviews with Dr. Mirtchev on the global economy can be viewed atwww.youtube.com/focuswashington.

Dr. Mirtchev is also a member of the board of directors of the Kazakhstan sovereign wealth fund “Samruk-Kazyna.”

December 8, 2008

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