These nations have the potential to reshape the global economy
By Myra P. Saefong, MarketWatch
As the big headliners for economic growth lose their appeal, the search for new stars has begun.
The “New Tigers” of the world are nations that have flown below investors’ radar, but are most likely to stand out in the years ahead as economic powerhouses such as the U.S., Japan, Germany, France, the U.K., Italy and Canada give up the spotlight to countries experiencing stronger growth.
Poland and Turkey in Europe, Peru and Colombia in Latin America, the Philippines and Indonesia in Asia, and Ghana in Africa, among others, have the potential to draw attention away from their better-known regional peers, defy the global slowdown, pique investor interest and reshape the global economy.
“An economic tiger should have a pattern of growth that is more than just a quarter or two,” said Karim Rahemtulla, emerging markets/options director at Wall Street Daily. “It has to be growing due to some type of competitive advantage that is afforded by its population, either through education or skilled or unskilled labor.”
Also, the political system must “recognize the need for growth and encourage it through looser monetary policy and with incentives for foreign direct investment, while at the same time moving to a system of legal protection for investors’ capital,” said Rahemtulla.
The world has already seen much of these strengths in Brazil, Russia, India and China, also known as the BRICs, which have taken center stage in recent years. Growth there remains strong, but they’re no longer seeing the spectacular expansions investors have come to expect.
The growth available in the BRICs is far from over, and “years and years of growth are left as the countries modernize, increase efficiency and continue to expand their middle classes,” said Bill Kornitzer, a portfolio manager of the Buffalo International Fund.
But the “avenues of growth will change as these economies mature and I believe we are already witnessing this as China moves from an economy focused on cheap exports to one focused more inward toward a rising consumer class,” he said.
Against this backdrop, “some other smaller ‘emerging’ or ‘growth’ economies are becoming increasingly important,” said Gene Huang, FedEx chief economist. “These countries may not have the size of the BRICs, but they play a significant role in the global supply chain.”
Source: Market Watch