PwC’s Growth Markets Centre has recently launched its 2017 annual report titled ‘Winning in maturing markets’, which focuses on reaffirming the role of emerging markets in an era marked by sluggish global growth and rising economic and political uncertainties across many parts of the world. The report also discusses the growth prospects for private sector players across six focus sectors, including agriculture, the social sector (which includes health & education), manufacturing, retail, financial services and connectivity (covering transport & communication). It further highlights the major capability areas to be developed by firms looking to succeed profitably in addressing these opportunities.
Growth markets are not necessarily ‘volatile’ and should be considered as ‘maturing’ in nature, with different markets following distinctive growth paths towards stability and long-term prosperity. Despite recent stagnation in the pace of real GDP growth as a result of domestic and external factors – including local and foreign policy actions, falling global commodity prices, speculation around rising interest rates and unfortunate environmental disasters – growth markets will continue to register a rising share in global GDP growth in the next five years, reaching almost 65% by 20211.
Economies is the Middle East have also been impacted by global reduction in oil prices, and Gulf Cooperation Council (GCC) countries like Saudi Arabia and United Arab Emirates (UAE) have seen a significant drop in GDP growth in 2016. However, a recovery is expected from 2017 onwards, driven by a growth in oil prices as well as due to an increasing focus on economic diversification. One of the most important sectors which can help propel this recovery and push growth in the long term is the manufacturing industry. Over the past few years, manufacturing Gross Value Added (GVA) growth has been robust in most Middle Eastern economies, including the large GCC countries like Saudi Arabia, creating opportunities for global players2.
Manufacturing is a major provider of productive employment and a significant growth driver in the early stages of an economy, and helps in further stimulating innovation in the longer term. Today’s growth markets are moving through their manufacturing evolutionary journey at different speeds, and to capitalise on the wide array of growth opportunities, organisations need to better understand the global shifts governing the market and operational landscape in the manufacturing sector.
“Manufacturing is seeing a global revival and redesign in many ways. After decades of facing pressures from low cost labour models, China effect, automation, and environmental issues, rapid changes in technology and global models promise an exciting era. Several mega trends and disruptions, including the 4th industrial revolution, promise radical changes in competition, economics, and industry landscapes - indeed a call to action for companies, countries, governments, jobs, and consumers. Investors, executives, entrepreneurs, policy makers.”
The report also discusses capabilities required to navigate through the complex business environment and institutional voids associated with growth markets. Companies will need to develop flexible business models which are more suitable for the local market, while developing new capabilities based on the foundations of operational efficiency, innovation and go-to-market excellence.
“As we enter 2017, it’s clear that growth markets are on the verge of a new era of leading global growth in which they are projected to enjoy almost two times the absolute growth in GDP as compared to developed markets by 2021, and account for 65% of global growth within the next five years. This will create significant opportunities for private sector players looking to create and deliver value to the billions of people expected to join the middle class in these markets.”
PwC’s Growth Markets Centre is global team, which supports companies navigate the ever changing complexities of entering and expanding into and from developing markets. For more information, please contact David Wijeratne – PwC Growth Markets Centre Leader or visit www.pwc.com/gmc
You can download a copy of ‘Winning in maturing markets’ here.
PwC’s Growth Markets Centre has recently launched its 2017 annual report titled ‘Winning in maturing markets’, which focuses on reaffirming the role of emerging markets in an era marked by sluggish global growth and rising economic and politica...
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