Tom Danson, Midlands Regional Manager at Atradius, outlines some of the most favourable ‘new’ global markets.
It wasn’t that long ago that thoughts of key emerging market opportunities would have focused on clusters of markets labelled by letters, such as the BRICs and the MINTs. However, with the economies in these regions now comparatively well established, UK businesses are asking where next to look for new opportunities.
Before we explore some ‘new’ and promising markets, it’s worth noting that the uncertainty of Brexit – and the nature of the various trade deals that will provide a framework for business in Europe, is perhaps, in part, what is prompting some UK businesses to be thinking about new trading horizons.
There’s no denying that there are some significant trade opportunities and rewards available for those companies prepared to put in the effort. The good news is that there are a number of economies which are predicted to perform strongly during 2018, in particular those less vulnerable to global risks such as the tightening of monetary policies in advanced economies, and the ripple effects of an economic slowdown in China.
As part of an ongoing economic research programme conducted by Atradius, which looks at emerging market opportunities, we have identified nine markets with significant potential. India, one of the original BRIC economies, is still very much in focus, as are two other Asian economies, Vietnam and Indonesia. In Central and South America, Costa Rica, Panama and Colombia have been identified, while Senegal and Morocco in Africa, together with the Czech Republic from Europe, complete the list.
The obvious question to ask is why these markets are expected to provide better opportunities than others. While the scope of the research goes into analytical detail covering a range of factors, there are some broader trends and characteristics that have influenced the final list, and these might provide us with a more concise answer.
Given the global influences of countries such as the US and China, as well as the Eurozone, it is important that any promising market in this environment should have strong, domestically driven economic growth, giving it the capacity to deal with external shocks. Flexible exchange rates to reduce the risk of losses caused by global volatility, while stable political conditions are also a must.
These markets typically have young and growing populations, marked by an expanding middle class, which boosts consumption and also increases demand for investment as well as imports. Also, it’s interesting to note that where macroeconomic policymaking is improving, such as in the three Asian economies, this is helping stimulate new business opportunities. Infrastructure development is also important, for example in Costa Rica, India, Panama and Senegal governments are pushing for investments in roads, power and railways, as well as in tourism.
Our full report explores seven key business sectors and identifies those countries that are most active within each category, with some interesting results. In the pharmaceuticals sector the three Central and South American markets stand out, driven by investment in pharmaceutical manufacture and growing healthcare sectors. Whereas, in the automotive and chemicals and plastics sectors, the Czech Republic, Morocco and Vietnam are prominent.
Such new opportunities are always exciting, but of course we should not forget that entering any new market also presents some inherent risks. Businesses need to find the right balance between confidence and caution. Making sure that decisions are based on the best information available, and familiarising themselves with new trade partners and the way they do business – as well as the wider economy, business sectors, cultural practices and political environments – will put British businesses in the best possible position to take advantage of these promising global opportunities.
Atradius provides trade credit insurance, surety and collections services worldwide through a strategic presence in 50 countries. Atradius has access to credit information on 200 million companies worldwide. Its credit insurance, bonding and collections products help protect companies throughout the world from payment risks associated with selling products and services on trade credit. Atradius forms part of Grupo Catalana Occidente (GCO.MC), one of the leading insurers in Spain and worldwide in credit insurance.