Rapid-growth markets forecast: Autumn 2012
Shifting, evolving, contracting — the global economy has been less about rapid growth and more about rapid change in 2012.
The top 25 economies selected for our forecast have the long-term potential to generate strong business opportunities.
In a global context, the top 25 economies selected for our forecast have the long-term potential to generate strong business opportunities. But even these 25 rapid-growth markets (RGMs) have not escaped unharmed from the uncertainty and fragility that impacted developed economies.
In January, we predicted that the expansion of the RGMs would slow from 6.1% in 2011 to 5.3% this year, before accelerating to 6.7% in 2013. Now, we are expecting the RGMs to grow by 4.5% this year and 5.5% next year — a trend caused largely by the deterioration of the wider international outlook.
GDP growth forecast for 2013: changes since January 2012
Source: Oxford Economics.
The RGMs are adapting to slower growth, but theirs is certainly no economic crash.
International backdrop has deteriorated
- This has impacted the outlook for RGMs' exports and their ability to attract FDI. We have revised down world growth in late 2012 and H1 2013 by around 1 percentage point. We now expect world GDP growth of 2.2% in 2012 and 2.5% in 2013.
RGM slowdown is worse than expected, but not dramatically so
- The RGMs will be partially shielded from the deterioration in the global outlook by resilient domestic economies, boosted by fiscal stimulus and by easing monetary policy and credit conditions earlier in the year.
Further marked commodity and currency rises would threaten RGM growth outlook
- RGMs’ growth rates will accelerate over the next two years, as the ECB succeeds in stabilizing the Eurozone economy, the US recovery gathers pace, the RGMs continue to gradually loosen monetary policy, and infrastructure spending is used to boost growth.
- To stop the fairly mild cyclical slowdown from getting worse, most RGMs have scope to ease fiscal policy. However, scope to ease monetary policy may be limited in coming months by higher food prices.
- The US Federal Reserve’s new quantitative easing (QE) round could create new inflation pressures, curtailing the scope of RGMs to use further rate cuts to boost their economies. QE may also strengthen the RGMs’ currencies against the US dollar, dampening their export growth.
Several countries are being monitored for inclusion in the RGMs list
- One year on from launching the RGM report, we have reviewed our 25 RGMs based on the economic, social and demographic criteria for selection. Because of the long-term nature of many of the criteria, things have not changed sufficiently to warrant any changes.
- Bangladesh, Pakistan and the Philippines stand out as non-RGMs that should be monitored closely for addition to the list.
Indonesia, Turkey and Vietnam stand out as particularly rapidly growing markets
- Indonesia, Turkey and Vietnam stand out as high-potential economies alongside China and India. All five countries are expected to grow by at least 5% p.a. over the next 25 years.