Global Economy Watch

Each month PwC's Macroeconomics team presents the Global Economy Watch, a short publication that looks at the trends and issues that are affecting the global economy and details our latest economic projections for the leading economies of the world.

Where do the pockets of opportunities lie beyond the BRIC economies?

When businesses think about which emerging economies to expand their activities into, the natural conclusion is to focus on the large emerging economies of the world. Indeed, our recently launched World in 2050 report shows that in the long-term the seven largest emerging economies, the E7, could grow twice as fast as the G7 on average.

However, we think that there are other smaller but equally appealing economies— what we call the ‘pockets of opportunity’—businesses should consider when thinking of expanding their international footprints.

Vietnam, for example, has negotiated a trade deal with the European Union and so could develop into a manufacturing hub in the future. Poland, with its access to the Single Market, has one of the most liberal Foreign Direct Investment (FDI) regimes of rich economies. And Colombia, has embarked on a radical $70 billion infrastructure programme—a boon to businesses that specialise in design and construction.

In this issue, we also discuss the prospects of a further rise in US interest rates on emerging economies. Even though we think that some markets may be overly exposed to dollar-denominated debt, we think most are in a better position to deal with tighter US monetary policy for three reasons.

First, the Fed has signalled a slow and measured rate rise, giving businesses in emerging markets more time to plan their foreign-debt management strategy. Second, most emerging markets have flexible exchange rate regimes allowing them to moderate the impact of negative capital flows through the nominal adjustment of their exchange rate. Third, most commodity prices on which some emerging economies are reliant (e.g. Nigeria, Brazil)  are back on the rise and likely to remain relatively stable, improving external balances. 

 

Global Economy Watch: February 2017: Where do the pockets of opportunity lie beyond the BRICs

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PwC's Hannah Audino discusses where the pockets of opportunity outside the BRICs could lie for your business.

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Barret Kupelian
Senior Economist
Tel: +44 (0)20 7213 1579
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