Greece to be redefined an 'emerging market'

Greece is poised to fall out of the leading group of developed economies and be redefined as an emerging market, a leading fund manager has warned.

Dr Mark Mobius, the executive chairman of Templeton investments who has been investing in emerging markets for 40 years, says on leaving the euro, Greece – which has seen its economy contract 20 per cent in three years – would no longer be considered a developed economy.

"Greece on exiting the euro, by most parameters, would become an emerging market, particularly as the average annual per capita income could fall below $13,000 (£8,294), the usual cut-off point for emerging market status."

Dr Mobius added that the other members of the PIGS club of economies – Portugal, Ireland and Spain – could also be deemed emerging markets if they too were to exit the euro and see a heavy devaluation in their currencies.

"It has happened before that developed economies become emerging. The most recent example is Argentina which was wealthy but through a series of crises no longer is."