The situation in Europe may look bleak today but the continent will work through and resolve its debt crisis and even shine further in the long term, says emerging-market guru Mark Mobius, Executive Chairman of Templeton Emerging Markets Group.
"It's not the end of the world; this will be worked out," Mobius tells MarketWatch.
"Europe will not disappear; the euro will not disappear. There will be a solution. Of course, people will have to pay for that solution."
In fact, the longer-term future for the embattled euro looks bright, says Mobius.
"There are challenges, such as member countries’ need to control government spending, but once these are sorted out, I believe the euro should be very successful and, in fact, it could possibly play a greater role in the global economy in 2020."
That bodes well for emerging markets, for which Mobius is famous.
Currently, Mobius is following five different emerging-market strategies: invest in energy, software (in India especially), financial services like in Brazil, consumer plays in countries like China and commodities.
In the near term, emerging markets are set to feel the squeeze from slower economic output in Europe and in the United States, a World Bank report finds.
Slower times in bigger economies often mean less demand for Brazilian metals, Chilean copper or Chinese manufactured goods.
The World Bank is predicting wealthier economies to grow around 1.4 percent this year, down from a June estimate of 2.7 percent, compared with 5.4 percent in emerging economies, originally forecast to grow at a 6.2 percent pace, Bloomberg reports.
"Should conditions in high-income countries deteriorate and a second global crisis materializes, developing countries will find themselves operating in a much weaker global economy, with much less abundant capital, less vibrant trade opportunities and weaker financial support for both private and public activity," the World Bank says in a recent report, according to Bloomberg.
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