Growth Markets for Exporters and Investors in 2017

Introduction: With global economic growth remaining sluggish for five consecutive years, businesses and investors have found it difficult to find markets that can provide the level of growth that they grew accustomed to in the years prior to the global financial crisis.  Since 2012, global economic growth rates have hovered at just above 3% per year, the weakest prolonged period of global economic growth since the turbulent years of the late 1980s and early 1990s.  Looking ahead, the forecasts for economic growth in the years ahead show that these relatively low levels of global growth are here to stay for at least the next four or five years, with the global economy expected to grow by just 3.0% this year and 3.4% next year. 

China: When we look at the economic growth forecasts for next year, and compare with the estimated growth rates recorded in 2016, we see that a handful of markets stand out as the key drivers of global economic growth over the near-term.  It is no surprise that Asia remains the regional market that is contributing the most growth for the global economy.  In 2017, nearly 50% of the additional economic output generated around the world will come from Asia, as the region’s larger economies are forecast to continue to grow at a faster pace than their counterparts in other parts of the world.  Two-thirds of this economic growth generated in Asia will come from the region’s emerging markets, led by China, which alone will still generate almost half of Asia’s economic growth next year, despite that country’s recent economic slowdown.  This is due to the fact that China is now the world’s second-largest economy as it is still growing at a much faster pace than the economies of North America or Europe.

India: Meanwhile, India has emerged as the world’s fastest-growing larger economy, with growth rates forecast to remain just below 8% per year in the coming years.  However, India’s economic scale remains much smaller than that of China, as India’s total economic output levels just recently passed those of Italy.  As a result, while India is undoubtedly a significant high-growth market for exporters and investors, the country’s ability to drive growth for the global economy remains relatively limited when compared to much larger economies such as the United States or China.  Nevertheless, major opportunities will exist for businesses and investors in India, particularly as consumer spending growth in India is forecast to rise sharply in the years ahead and as the country’s low-cost manufacturing industries benefit from low labor costs, economic reforms and new investments in the country’s infrastructure.

Southeast Asia: Southeast Asia is another high-growth region found in Asia that will offer significant growth opportunities for businesses and investors in 2017 and beyond.  With 660 million people, Southeast Asia offers huge growth potential for exporters, particularly as wealth levels will continue to rise across the region.  Moreover, the region will continue to attract investment in a wide range of investment, ranging from high-tech investments in more advanced economies such as Singapore and Malaysia, to low-cost manufacturing investments in countries such as Indonesia, Vietnam and the Philippines.  With many of the Southeast Asia’s leading economies forecast to grow at a pace of around 6% in 2017 and in the following years, this region will become an increasingly important driver of growth for the global economy.

North America and Europe: Outside of Asia, the rest of the world will contribute a little more than half of the additional economic output generated around the world in 2017.  Most of this growth outside of Asia will be generated by the developed economies of North America and Europe, which will combine to generate one-third of 2017’s global economic growth.  In North America, a slightly stronger performance by the United States economy next year will allow the US to account for 20% of the increase in global economic output next year, more than any other country outside of China.  In Europe, the European Union is forecast to contribute just below 10% of next year’s global economic growth as the EU’s tentative economic recovery appears to have peaked, with growth in Europe forecast to slow slightly next year as key economies such as Britain, France and Spain are all expected to record lower rates of growth in 2017.  Nevertheless, even as growth rates in North America and Europe have largely been disappointing in recent years, these two regions still remain important markets for businesses and investors and are still providing significant growth opportunities. 

Non-Asian Emerging Markets: Outside of East and South Asia, the world’s other key emerging regions have struggled to generate any growth in recent years, as these regions’ dependence upon commodity exports for much of their growth has left them exposed to downturns in global demand.  For example, economic growth rates in the Middle East and Africa are forecast to remain very low in 2017, particularly in those countries where oil and gas exports are the key drivers of growth.  In fact, despite having a combined population of nearly 1.5 billion people, the Middle East and Africa are forecast to contribute less than six percent of the increase in global economic output next year.  Another region that has struggled in recent years has been Latin America, with the region’s leading economies in deep recessions (such as Brazil and Venezuela) or struggling to record significant growth (such as Mexico and Argentina).  However, Latin America is expected to slowly begin to recover in 2017 and this will allow for the region to contribute more to global economic growth in 2017 than at any time in the past three years.