The Global Economy in 2018: Eight Opportunities for Growth
2017 proved to be a better year for the global economy than many businesses and investors had hoped for, with growth rates rising in most of the world’s largest markets and economies. For developed economies, last year was the best year since the global financial crisis in 2008. In the United States, growth accelerated after a sluggish start to the year, while Europe and Japan both recorded better-than-expected rates of growth over the course of 2017. For emerging markets, last year saw mixed results, with Asian emerging markets continuing to lead the world in growth, while Central European countries recorded their highest growth in many years. Meanwhile, commodity-dependent emerging markets continued to struggle, but at least there were signs of growth in the second half of last year for many key commodity-driven emerging markets in Latin America, Africa and the Middle East. Overall, 2017 provided many opportunities for growth for businesses and investors, provided that they chose the right markets and industries to focus on over the previous 12 months.
As we enter 2018, it is clear that the global economy is in better shape than at any time over the past decade. As a result, the level of optimism among businesses, investors and consumers is higher than it has been for many years. In fact, there is a distinct possibility that the level of global economic growth this year could reach 4% for the first time since 2011. Despite this optimistic outlook for the new year, it is important for businesses and investors to focus on those markets and industries that will provide them with the best opportunities for growth this year. Here are eight such opportunities:
Developed economies: In the wake of the global financial crisis, most major developed economies struggled to record much growth at all, resulting in emerging markets contributing more to global economic growth than ever before. However, this situation has changed over the past year, and major developed economies in North America, Europe and the Asia-Pacific region are forecast to once again grow at relatively healthy rates in 2018, with consumers and businesses in these economies feeling optimistic.
Emerging market consumers: Those emerging markets that have survived the fall in commodity prices in recent years are those with the most diversified economies. Moreover, they are the economies in which consumer spending levels (and purchasing power levels) have risen the fastest. As such, emerging markets in regions such as Asia and Central Europe are now providing major opportunities for growth for consumer goods and services providers around the world, a trend that will continue for the foreseeable future.
Infrastructure: Many of the world’s largest economies are beginning to move to enact major improvements in their infrastructures, particularly in areas such as transportation, electricity and communications. This will require massive levels of investment in 2018 and beyond, particularly in emerging regions such as South Asia and Sub-Saharan Africa, providing huge opportunities for growth for businesses in these sectors.
Defense: Defense spending will continue to rise in 2018 as geopolitical concerns mount. While North America and Europe will see some increase in defense spending in the coming year, it is Asia where most of the increase in global defense spending will be realized this year. This is good news for the world’s defense industry and its affiliated industries, which are set to record strong growth once again this year.
Automation: As the working-age populations in many of the world’s leading economies decline, and as job creation levels have improved in recent years, labor shortages are becoming a major hindrance to growth in many economies and industries. This will lead to a further increase in the level of automation in many economies and industries, a trend that will gain momentum in 2018.
India: After a difficult year in 2017 that was largely the result of the withdrawal of 86% of the country’s banknotes and the implementation of a new goods and services tax (GST), the Indian economy will rebound strongly in 2018. As a result, India will again approach economic growth rates of 8% by the latter part of this year, allowing India to regain the title of the world’s fastest-growing large economy.
Southeast Asia: Home to more than 660 million people, Southeast Asia’s economy has consistently grown at pace of around 5% per year over the past five years, a trend that is forecast to continue in 2018. Not only is the region home to some of the world’s fastest-growing economies (including Vietnam and the Philippines), but once-sluggish economies such as Thailand are poised to make a strong comeback this year.
Over-65s: The one market segment that is guaranteed to grow in 2018 and the years and decades beyond is the over-65 market. In developed economies, there are 240 million consumers over the age of 65 today, a number that will rise to 350 million by 2050. In emerging markets, there are 440 million consumers over the age of 65 today, but there will be 1.2 billion such consumers by 2050. Goods and services providers focused on this growing market segment have a bright future.
The world is flush with opportunities for growth for businesses and investors in 2018. Nevertheless, choosing the right markets and industries is the key to a successful year in 2018 and beyond, as there continues to be major discrepancies in the levels of growth among the world’s leading markets and industries. Moreover, identifying those trends that will both drive the global economy in 2018 and that are sustainable over the long-term is vital for the health of any business or investor. With global economic growth forecast to begin to slow slightly in 2019, it is clear that 2018 is a crucial year for many businesses and industries that hope to build on the momentum gained in recent years. As such, making the right decisions in terms of the markets and industries on which to focus their efforts will be vital to their success, both this year and in the long run.