For
whom the bell tolls - NEW MARKETS
Twenty-five years ago, when I first began visiting
Hong Kong and Singapore to provide briefings at regional headquarters of
multinational corporations, I realised from the extent of their commitment that
this region would soon become core to their activities. This appears to have
finally happened. This paper shares some drawings about the rise of emerging
markets and their implications based on the growth forecasts produced by the
International Monetary Fund (IMF).
America is currently the world’s largest
economy valued at USD 19.3 trillion. The next largest, China, produces USD 11.9
trillion worth of output. Based on growth rates, America in 2017 generated new
markets aggregating USD 737 billion whilst China produced USD 705 billion. The
total rise in global output was estimated to be USD 3.9 trillion. As of now, it
would be correct to say that advanced economies generate the greater demand of
goods and services every year. However, that is all about to change.
Based on growth forecasts
produced by the IMF, we expect over the next 10 years, the global economy to
expand by USD 52 trillion, growing from the current USD 79.3 trillion to USD
131.7 trillion. Of this, America’s share would be USD 8.6 trillion and China
would add another USD 15 trillion. As a matter of interest India, over that
period, would grow by USD 3.6 trillion to a USD 6 trillion economy. Emerging
markets as a bloc would add USD 32 trillion to global demand, far outpacing
growth opportunities within advanced economies (USD 19 trillion). It is no
wonder therefore that Western multinationals, leaving the comfort of their home
markets, search out business opportunities in these markets.
The role of business finally boils down to
profitable growth. In the decade ahead, growth will begin to taper in Western
countries as their populations’ age and markets begin to saturate. Asia, on the
other hand, has demographic advantages on its side and with a combination of
better governance and investment will be able to exploit them. Therefore, they
will offer lucrative growth opportunities for global corporations. Within Asia,
clearly two markets will stand out. China will be the bigger opportunity but so
will India, which over the next decade will have the same transformative impact
on global supply and demand as China did over the last decade.
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