Skip to main content

For whom the bell tolls


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.



Labels:

Comments

Post a comment

Popular posts from this blog

Uday: a federalist success story

At our 21 st Annual CEO Roundtable in Thimphu last week, there was spirited debate over the performance of the current administration. A participant suggested that the Ujjwal Discom Assurance Yojana (Uday), a scheme to reform India’s downstream power sector, for all its fanfare was actually a failure of sorts and that India’s renewable energy programme, specifically on solar energy, was lacking on many counts. Whilst it was my intuitive belief that both claims were unsympathetic, I thought it would perhaps be in order to examine the facts in detail and subsequently provide an assessment. This paper, accordingly, presents an analysis of the first of the two issues – the Uday programme. The second will be addressed in a subsequent piece. The electricity distribution crisis: background Electricity distribution has been disastrously managed over the last three decades and in 2015 was on the verge of absolute collapse. Under-priced power, operational inefficiency, broken equip
Post a comment
Read more

The Employment Conundrum

Over the last three months, I have had the opportunity of engaging with our clients across various forums and cities. What provided a platform for this interaction was my briefing on four critical initiatives that we believe will, if properly implemented, serve as game changers with a palpable impact on economic output. The question that consistently came up almost everywhere was on the perception of jobless growth and consequently, rising unemployment within India. This has possibly been based on recent press reports and television debates that consistently cite certain headline statistics. These suggest a fall in employment levels between 2011-12 and 2015-16 compared to vigorous growth in earlier years, since 2004-05. Even on the surface, this conclusion does not gel fittingly with other statistics. For instance, indirect tax collections and consumption expenditure, which are both proxies of aggregate spending and wellbeing, do not corroborate falling employment. Tax collections
Post a comment
Read more

All the Prime Minister's Men

The composition of Prime Minister Manmohan Singh’s cabinet would suggest a desire to resume the process of reforms, which had practically stalled during his somewhat uninspiring previous term. It is also indicative of a more assertive Congress Party within the larger coalition of the United Progressive Alliance. The Congress has retained key economic ministries and also taken control of other important ones that were previously with their allies. With Pranab Mukherjee at the Treasury, P Chidambaram at Home and AK Antony at Defence, three crucial departments appear to be in the most capable hands. Mr Mukherjee, possibly the senior most member of the Singh administration, has over the years served in various positions in the government. He was India’s Finance Minister between 1982 and 1984 in the Indira Gandhi cabinet and brings to the table considerable technical competence and robust political acumen. Disinvestment of state-owned enterprises; financial sector reform; the implementat
1 comment
Read more