World’s Best Economies for Investors
The World Economic Forum (WEF) is a non-profit foundation based in Switzerland. It exists for improving global economic and political conditions. It brings together powerful and influential members of the political and business world, as well as other high-ranking intellectuals and elite people of influence, to deal with global and regional challenges.
Every year the WEF releases the Global Competitiveness Report (GCR), which ranks nation states using the Global Competitiveness Index. The underlying goal of the list is to ascertain the order in which countries provide the conditions for economic prosperity to their citizens.
The GCR looks at a raft of factors, ranging from public policy of a country, to efficient and responsible usage of resources, demography, financial markets, infrastructure such as healthcare and education, as well as the ability to innovate, design and manufacture products for domestic consumption and export. The 12 pillars of competitiveness summarize these factors.
Global Competitiveness Report 2015-2016
Due to the Western world’s global superpower status, Western countries continue to occupy the top positions in this report. With Switzerland topping the list again, the US in 3rd place, Germany and Netherlands in 4th and 5th place respectively, and Finland, Sweden and the UK in 8th, 9th, and 10th place respectively, the top ten are dominated by Western countries. Most of the remaining Western countries can be found in the top 30 positions.
Emphasis supplied, is on the performance of some of the other regional blocs. Analysts look at the following regions to get a better picture of future patterns in global geopolitical trends:
- North America and Western Europe
- East and South-East Asia
- Sub-Saharan Africa
- The Arab world and the Middle East
- Russia and Commonwealth of Independent States
- Latin America and the Caribbean
- South Asia
Understanding these trends can provide a window into regional prosperity and stability, and give an idea as to who may come to dominate global geopolitics in a post-American world. It provides useful indicators to investors in areas for potential growth and economic strength, as well as less stable or prosperous regions to avoid.
With the western world facing economic turmoil, stagnant economic growth, and turbulent stock markets, many investors with a more adventurous mindset are wondering which regions might offer strong long-term growth prospects for the foreseeable future. We take a look at three regions that may promise to offer good long-term growth prospects for investors.
The Far East
The Far East is making incredible progress on a global scale. With Singapore again hitting the 2nd place, Japan at 6th place, Hong Kong at 7th place, Taiwan at 15th place, and Malaysia increasing by two positions to 18th place, many of the non-western nations in the top 20 positions are occupied by the Far East. Other big hitters such as China, Indonesia, and Thailand are in the top 40.
Some of the Far Eastern nations lower down the list are making strides forward to increase their rankings. Likewise, Philippines grew from 52nd to 47th place, Vietnam rose from 68th place to 56th place, and Sri Lanka has moved from 73rd place to 68th place. These show a growing trend for the Far East improving its prospects.
With many Far Eastern countries having young populations, cheap labor, improving conditions in education and health care, and well-established industries in areas such as electronic component manufacturing, the prospects for the Far East look strong for the foreseeable future. With strong economic growth predicted for the foreseeable future, and increasing domestic consumption and infrastructure development, the Far East has good prospects for investors.
Sub-Saharan Africa continues to struggle with long-term developmental problems that have caused many of these nations to lag behind in the GCR. There have been some slight improvements in their rankings, along with a few new additions to the rankings.
This region has considerable potential for investors, as huge infrastructure projects are required. The demography is conducive to strong economic growth, and as domestic consumption increases, there will be more opportunities for making good returns. According to the IMF, infant mortality is decreasing, more people from this region may be entering the workforce than the rest of the world combined.
An area of concern is the high fertility rates, and getting these under control will be a key area affecting growth in the foreseeable future. Creating more jobs to keep up with the population growth is a major challenge. The IMF has recommended stimulation of growth in the private sector to create jobs.
If these policies are pursued by the governments and private investors of this region, with suitable policies and large-scale investment in creating new businesses, some solid investment prospects may be on the table.
The Middle East
Turkey did not feature on the Global Competitive Report this year due to the instability on its border with Syria, along with increased tension with the Kurdish minorities both in Turkey and neighboring countries seeking greater autonomy or outright independence.
However, as drastic efforts are being taken to defeat ISIS and bring about a lasting peace agreement, this could offer some rapid growth on investment. Turkey continues to enjoy rapid growth in infrastructure, a strong manufacturing base, and a strong position as one of the so-called MINT economies.
Qatar, the UAE, and Saudi Arabia continue to enjoy strong positions in the ranking list. The recent turbulence in the oil prices has generated a keen interest in diversifying the economies and investing heavily in creating stronger, less oil- dependent economies.
Efforts to expand into innovation are underway, and Saudi Arabia has announced the part-privatization and subsequent floating on the stock market of their oil giant Aramco. With relatively stable internal stability, and a strong focus on diversification and investment, these could well be investment opportunities to watch for the foreseeable future.
Iran has made a major leap from 83rd place to 74th place, and with sanctions lifted after the nuclear deal, we could well see a significant influx of investment opportunities. Stable countries such as Morocco, with a large tourism industry and burgeoning property development market, offer enticing prospects for property investors or other developments such as hotels.
As well as Syria and Iraq, instability in Yemen and tensions between Saudi Arabia and Iran have caused some nervousness amongst investors, but all-out war seems unlikely or spreading of conflict or instability to any additional countries.
With resolutions to these conflicts on the horizon and a strong desire for innovation and diversification, the Middle East could offer an attractive investment opportunity for the growth-seeking investor, fed up with stagnant economies and turbulent stock markets in London and New York.