February 14th, 2013
Via Maplecroft, a report on how China, India, Indonesia, Vietnam, and Bangladesh have best long-term growth prospects in the world:
The economies of China, India, Indonesia, Viet Nam and Bangladesh have been identified as having the best growth prospects for business over the next two decades, according to Maplecroft’s newly released Global Growth Atlas 2013, which evaluates the economic performance, stability and potential of 173 countries.
Exceptional GDP growth performance and the size of current and future markets in China (ranked 1st) and India (2nd) mean they significantly outscore all other countries in the Atlas. Also included among the ten best future markets for business are: Indonesia (3rd), Vietnam (4th), Bangladesh (5th), Brazil (6th), the Philippines (7th), Nigeria (8th), South Korea (9th) and Malaysia (10th).
Maplecroft’s Growth Markets Atlas 2013 has been developed to provide companies and investors with a global picture of the future economic growth environment to aid with strategic planning over the coming years. It evaluates each country on its growth performance, growth environment conduciveness and growth potential by analysing economic trends; the ease with which foreign business can invest; recent structural reforms; and projected demographic developments, including growth of middle class consumers.
The Maplecroft 30 growth markets
Rank Country 1 China 2 India 3 Indonesia 4 Viet Nam 5 Bangladesh 6 Brazil 7 Philippines 8 Nigeria 9 South Korea 10 Malaysia
Rank Country 11 Russia 12 Tanzania 13 Singapore 14 Hong Kong (China) 15 Peru 16 Egypt 17 Thailand 18 Colombia 19 Turkey 20 Uzbekistan The only BRIC nation not to feature in the top ten is Russia (11th), which faces long-term challenges to its economy, including a decreasing working-age population, poor legal and regulatory framework and a heavy reliance on commodity exports. An aging infrastructure also needs updating for it to improve its growth potential.
East and South-East Asia, with six out of the top ten countries in the Atlas, are likely to remain the regions with the best performing economies out of the conventional emerging markets classifications that exist. This is largely due to their openness to trade and capital flows, macroeconomic stability and favourable demographic outlooks. However, Latin America could be the new region to watch with promising signs for catch-up growth, such as good measures of human capital and infrastructure readiness.
Looking towards the less established growth markets, Maplecroft states that the growth of middle class consumers over the coming decades could boost output in a number of countries – including in Nigeria and the Philippines. This may be enhanced by progress on the human capital front, which can improve the productivity potential and future attractiveness of the labour force. Likewise, the middle class is forecast to expand by 15- 20% a year, until 2020, in countries including India, Bangladesh and Viet Nam, which will enhance domestic consumer spending.
‘By understanding how the economic landscape will reshape, business can adapt long-term strategies to benefit from the growth markets,’ states Maplecroft CEO Alyson Warhurst. “From new infrastructure projects, to an expansion of sectors such as telecoms, retail and finance, new industries and investment opportunities will emerge as these economies expand.”
The top performing markets in the Atlas have been grouped into the Maplecroft 30. These are being highlighted by the company as the markets to watch. The inclusion of developing countries, such as Tanzania (12th), Peru (15th), Uzbekistan (20th), Ethiopia (21st), Iraq (22nd), Ghana (24th), Morocco (28th) and Uganda (30th) in the Maplecroft 30 provides investors with a diverse array of economies that could see significant gains over the medium-to-long-term.
However, concerns relating to poor legal and regulatory environments, widespread corruption and a failure to respect the rule of law, may act as a major hindrance to the business environment in some of these economies. Maplecroft views reform in these areas as crucial if countries are to reach their full economic potential. In this regard, Nigeria, Russia, Uzbekistan, Ethiopia, Ghana, Morocco and Uganda all underperform, but they could see their ranking improve if reforms are implemented as an imperative.
A number of countries falling outside the Maplecroft 30 also show signs that could see them become top performers in the future, such as Pakistan (32nd), Kazakhstan (34th), Mozambique (41st) and Mongolia (54th). Maplecroft, however, highlights the need for ongoing legal and regulatory reform in Pakistan to improve its standing in the Index, while Kazakhstan and Mongolia, will need to diversify away from a dependence on commodity exports. Mozambique, on the other hand, could see medium-to long-term gains in growth should it instigate greater trade and capital flow openness.
Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.