Emerging markets to target in 2011
Emerging markets to target in 2011
Emerging markets to target in 2011
Smart investors know that, with echoes of the 2008 economic crisis still being felt in the developed world, the real growth, and potential for profit, is in the emerging economies.
Experts estimate that real Gross Domestic Product (GDP) growth for 2011 in developed markets and the G7 economies (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) will be a measly 1.9%.
Meanwhile, the BRIC nations (Brazil, Russia, India, China) are forecast for GDP growth of 6.4%, while Emerging Economies (classified as all economies outside the G7 and other developed western nations) were put at 5.1% growth, and the pleasingly-titled Frontier Markets (Bangladesh, Sri Lanka, Vietnam, Pakistan, Peru, Egypt, Iraq, etc) were estimated at 4.8% average annual GDP growth for the coming year.
The International Monetary Fund backs these figures, estimating overall growth for Asia at 7% and at 4% for South America and Mexico this year, while Europe languishes at growth of 1.9% (although Central and Eastern European countries such as Romania, Slovakia, Estonia and Turkey will fare better, with growth between 3.4% to 5.1%).
What this means for wise investors and business people is that, if you're looking for growing consumer, government and B2B spending power, then you'll be moving away from the near-stagnant developed nations and putting your money into emerging markets, where lower production costs are causing massive surges in national output, and delivering (in most cases) subsequent rises in wages and expendable income.
China is the top market to target, with forecasts for real GDP growth of 9.9%. And with an online population of 420 million people, of which 142 million are known to shop online, if you're in the ecommerce business then you'd have to be crazy not to try and get involved. Indeed, China's ecommerce market reached revenues of $22,436.2 million in 2009.
India is the second strongest market to target, with projected growth of 8.4% for 2011, and the Population Reference Bureau census showing that, with a population of 1.21 billion people, 17% of the world is now Indian (indeed, India is set to outstrip China as the world's most populous country by 2050). With a middle class which is growing in size alongside the population and expected to reach 267 million by 2016, they're a wise bet for consumer goods companies looking for customers with expendable income.
For businesses involved in selling online (a far more cost-effective proposition than establishing on the ground'), the BRICI economies are the places to target (that's Brazil, Russia, India, China and Indonesia). These countries are currently home to 610 million internet subscribers (mostly accessing the web on mobile handsets), and this number is set to double to 1.2 billion by 2015 (according to management consulting firm Boston Consulting Group).
A recent report by global investment banking and securities firm Goldman Sachs backs the emerging economies, showing that the BRIC and N-11 (Next 11) economies (Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam grouped together for their high economic potential) are emerging from the global financial crisis better than the major economies. And China's economy is even estimated in the report to become as big the US by 2027.
The paper concludes that China is set to be the top performer, with Brazil, India and Egypt also performing well, while Indonesia and the Philippines lead the N-11. And the wise investor will mark their words, and put their money on these emerging markets for the years to come.
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