They are big. They have young and growing populations. They have
invested in infrastructure and education. And they are growing at the
sort of rates that make them the envy of the recession-hobbled west.
No,
these are not the famed Brics – the big emerging market economies of
which much has been heard since the acronym was first coined by Jim
O'Neill of Goldman Sachs more than a decade ago. Rather, they are a
second wave of countries – some Asian, some Latin American, some African
– coming up fast behind.
As the west remains mired in gloom and
even the Brics start to plateau, attention is turning to this group of
countries, many of which not so long ago were rudely dismissed as basket
cases. Acronyms are hard to coin, as few of them start with a vowel.
But when growth rates for 2013 are chalked up, these are the countries
that will dominate the top 20. In anticipation, the Guardian is
launching a three-day series throwing the spotlight on several of these
fast-growing countries.
The changing face of the
global economy
is reflected in the rapidly expanding scale of the summits designed to
sort out its problems. Not so long ago, when 80% of global GDP was
accounted for by Europe, North America and Japan, it was the G7 that was
the forum that counted.
By the middle of the 2000s it became impossible to discuss the future of the world economy without the presence of
China and
India, and when a second great depression loomed in late 2008 the
G20 was formed. This included not just the
G8 and the Brics but a sprinkling of the more strategically important emerging economies, such as
Indonesia,
Turkey,
South Korea,
Mexico,
Argentina and South Africa. Recent developments suggest that more seats may be needed at the conference table before too long.
While some emerging countries, such as
Vietnam,
have been hard hit by falling western demand for their exports since
the financial crisis of 2007-08, others have been sustaining strong
growth rates.
Bangladesh and the
Philippines have been helped by remittances sent home from expatriates working overseas.
Nigeria has been a beneficiary of the global
commodity boom that has seen the cost of a barrel of Brent crude oil
remain above $100 a barrel. Mexico and Indonesia have generated strong
domestic demand from their large populations.
John Hawksworth,
chief economist at PricewaterhouseCoopers (PwC), said: "There are
countries beyond the Brics that have quite strong long-term growth
potential."
Forecasts
Back in 2006, PwC made some
long-term forecasts about what the global economy might look like in
2050, and it has now updated the predictions in the light of the
financial crisis and its aftermath. By 2050, Hawksworth expects Turkey's
economy to be bigger than Italy's, and one of the largest in Europe.
Indonesia and Mexico will have outstripped Germany and the UK.
Economists
such as Hawksworth say there are a number of key factors that are
allowing emerging countries to grow more quickly than the mature markets
of the west. Firstly, they need sound macro-economic policies,
including control of inflation and budget deficits. Secondly, they have
invested in human capital, improving their educational standards.
Thirdly, they have been able to import new technologies from the west,
with the spread of mobile telephony in Africa an example of the way in
which a lack of physical infrastructure can be bypassed to boost
productivity quickly. Finally, they tend to have young and growing
populations.
O'Neill, when he identified his "Next 11" group as
the successors to the Brics, chose many of the most populous countries
in the world for his list: Bangladesh, Egypt, Indonesia, Iran, South
Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam.
"Some
of these emerging countries have good demographics, based on a growing
and younger population than countries in the west," Hawksworth said.
"They
have a lot of potential for catch-up as long as they have broadly
growth-friendly policies – a big if in some cases. They have the
potential to absorb technology from overseas and can get rapid growth.
It doesn't mean all will achieve it but a fair few will." He drew a
comparison between South and North Korea, saying one of the world's last
bastions of communism was an example of what happened to countries that
cut themselves off.
HSBC has cut its growth forecast for 2013
because of the impact of collapsing world trade on those emerging
markets that have based their development on export growth. But in the
longer term, there is optimism even for what has up until now been the
world's slowest-growing continent: Africa.
Charles Robertson,
chief economist at Renaissance Capital, an investment bank for emerging
markets, said he expected a sevenfold increase in Nigeria's GDP per head
over the next four decades. "Africa today is a top 10 global economy,
with $2tn of GDP – similar to Russia. By 2050, if it continues the
trajectory it has been on for the past 30 years … it will be $29tn
[£18tn] and bigger than the US and eurozone combined today."
