Emerging markets the ones to watch

Investors have shown a tendency to snub those mature markets coming out of recession, suffering from a hangover of indebtedness and stimulus packages. Instead, they’re turning to emerging markets, which have shown impressive levels of growth and, because of their dynamism, are probably set to drive global economic growth in the years ahead.

This is the view of Dr Lyal White, director of the Centre for Dynamic Markets at the Gordon Institute of Business Science (GIBS), who spoke at the recent GIBS Foresight 2011 Forum held on major trends that will shape business in the year ahead.

Growth in mature markets in 2011 is expected to be around 1,7%, an average they look set to maintain to 2020. Dynamic markets led by the likes of India and China will grow on average by over 6,5% in 2011 and beyond. These markets will represent over 80% of global economic growth in 2011.

“Growth has shifted decisively from the West and the North to the East and the South, while debt has shifted from the East and the South to the North and the West,” said White.

While trade and investment will show similar trends and patterns, new players outside the traditional Bric (Brazil, Russia, India and China) economies will start making their mark in 2011. Turkey, Indonesia, Vietnam and Colombia are just some of the countries to watch in 2011. White believes that they are the next tier of markets with great potential and ambition. While African economies like Ghana and Nigeria will start attracting more global interest, it is the patchwork of African economies as a whole that forms part of this new fold. Africa is an exciting place to be in and South Africa is no exception.

“Africa is playing an important role in fuelling economic growth in emerging economic powerhouses like China, India and Brazil by supplying natural resources. Africa is also a lucrative investment destination for multinational corporations [MNCs] from these nations, but our continent is also an important area of potential market-led growth. With a population of close to one billion — half of who are under 35 years old — market and labour opportunities abound,” said White.

Above all, 2011 will reveal the true diversity of dynamic markets. We can’t view these as homogenous — indeed, the “good” dynamic markets will be separated from the “bad” next year, in all likelihood. A fresh generation of multinationals will gain traction across the globe as they compete with their “old world” counterparts. White believes that these players will rise to compete with the best of the old next year — which means interesting times lie ahead for investors.

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