Key Frontier Markets Defy Gloom Over Global Economic Prospects

Via the Wall Street Journal, a look at frontier markets:

People living in frontier markets are considerably more optimistic about their economic prospects than those living in the developed economies, research by the Pew Center has found.

According to a study released today, the populations of two of the largest frontier markets—Vietnam and Nigeria—stand out as particularly optimistic about the future, but researchers also found that people in Ethiopia, which has only recently begun to appear on investors’ radars, have extremely positive views on their economy.

Bruce Stokes, director of global economic attitudes at Pew, says the study shows global economic sentiment remains relatively subdued but in key growth markets it is positively exuberant. “If you look across advanced, emerging and developing markets, the median level of optimism about the future is not great,” he observes. “But in Africa, for example, we found that in countries that have had recent strong growth—and especially in those that have been growing for years—people felt good about the economy.”

Among the frontier markets where people consider the economy to be doing well, Vietnam and Ethiopia stand head and shoulders above the others. In both countries almost 90% of respondents are upbeat about their country’s economy. Senegal and Nigeria come in a distant third and fourth, with 60% and 57% positive sentiment respectively.

At the other end of the scale—and perhaps not surprisingly—are Venezuela, with 17% positive sentiment, Lebanon with 10% and Ukraine with just 3%.

Stokes believes the high level of optimism in Vietnam is related to the country’s move toward a more open economy and the promotion of trade as a means to drive growth. “We asked them if trade creates or destroys jobs,” he says. “Overwhelmingly, they said it creates jobs. Their experience has been that this opening to the world has boosted their standard of living.”

That finding may help explain why, in aseparate survey Pew conducted recently about the proposed Trans Pacific Partnership, Vietnamese respondents were overwhelmingly positive about the trade deal. “If people in Vietnam see trade as beneficial, an agreement that would enhance trade with the US can only be even more beneficial,” Stokes comments.

When asked about their attitudes toward the coming 12 months, Nigerians were more excited than Vietnamese, with 92% expecting the economy to improve compared with 73% in Vietnam. Ethiopians are also upbeat, with 84% expecting improvement over the next year. In Pakistan, the proportion is just 48%.

A similar pattern emerges concerning people’s hopes for the next generation. Among frontier markets included in the study, the most optimistic were people in Vietnam, where 91% felt upbeat, and those in Ethiopia and Nigeria, where 84% of respondents were positive about the prospects for the next generation.

Least optimistic were people in Lebanon, Tanzania, Jordan and Kenya.

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

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