Emerging Markets Have A Strong Outlook For The First Time In A Long Time

For many, the expression "Emerging Markets" is nothing more than a buzz word. A snazzy term used by people to sound informed. The reality is that for many years (while emerging markets have struggled) people have tried to find a more descriptive label, but few alternatives have gained popularity.

The good news is that “Emerging Markets” are actually emerging for the first time in a long time. They are emerging from a period of stagnant growth. They are emerging as real expansion and strategic growth opportunities.

Define and Align

Before we can expand on why these markets have a stronger outlook for global companies, we need to define and align. We must define what an emerging market is, and align on which ones are most important.

Define: For the most part, emerging markets are defined as markets that have established business sectors, like those of developed regions, but lack the robust supporting infrastructure that exists in highly developed countries. Think about China’s retail sector for a moment – incredibly busy, and flush with new brands, products, and services – but the supporting infrastructure of brick and mortar stores (and their complex logistics network) rarely exists outside tier two cities.

Align: Analyst opinions differ when asked to identify all of the world’s emerging markets, but the following markets are widely regarded by all top analysts to be the Big Emerging Markets (BEM’s): China, Brazil, India, Mexico, Philippines, Russia, South Africa, and Turkey.

If we look at these countries as a group, there are three consistent trends that clearly highlight the fact that emerging markets are on an upward trajectory.

Year Over Year Growth

In 2017, the economies of Brazil, Russia, Turkey, and South Africa have all showed annual GDP growth rates above the previous year. In fact, during the middle of 2017 the Wall Street Journal projected that some Emerging Markets could grow by as much as 4.7% in 2017.

Global Trade

Exports represent a larger share of emerging market output when compared to developed economies, making them more reliant on trade. And total world trade in goods accelerated to an average of 4.4%, in volume terms during 2017, an increase from 1.3% in 2016.

Weakening USD

The USD slid as much as 12% against major currencies like the Euro in 2017.  And while a weakening USD may hurt the purchasing power of US-based companies, it means companies outside the US will have increased buying power. For example, the Russian Ruble ended 2016 at an exchange rate of 61 / 1 against the USD. The Ruble did not see a rate this high during all of 2017 and it sits at 57 / 1 against USD as of Jan. 3rd.  

Of course, not all of the future for emerging markets is bright. There is still significant geopolitical uncertainty and instability that could wreak havoc on these growing, and subsequently fragile, markets. Russia’s continued military assertions in Eastern Europe, Korea’s saber-rattling throughout Asia, and the US administration’s protectionism theme could all manifest in economic earthquakes.

Whatever the beginning of 2018 brings, we’re hopeful that after these insights “Emerging Markets” are less confusing and more enticing to those in the business of global trade. It’s a big world out there and the opportunities are endless.

That Time in Russia I Was Famous

Anyone that has traveled for work knows it's not actually glamorous. Long flights, small hotel beds, stuffy conference rooms, and sketchy WIFI. Sounds awesome, right? Sure, there are ways to make it more enjoyable and there are some amazing sightseeing opportunities (sometimes) but it's never quite like being "home". So I often look for ways to pass the time and enjoy myself whenever possible. More often than not, this results in me engaging in dialogue with the locals.

On one such occasion, I had just landed in Moscow at the end of a very long travel day. I was tired and a little punchy. After exchanging hand signals and some broken English with a taxi driver, I found myself headed to my hotel in the backseat of a car that smelled like a washroom. We were only a mile into our trip when the driver and I met eyes in the rear view mirror.  I smiled, he said "where from?" To which I responded "United States....Pittsburgh". "Oh...Pittsburgh?" he says. Thinking quickly for some relevance, I followed "Yes.....Pittsburgh Penguins. Hockey. Evgeni Malkin?" There was silence. The driver was digesting my fragmented sentence and train-wreck of thoughts. Then, in an instant, his face lit up. Almost swerving the car from the road, he turned around and shouted "Evgeni Malkin.....you, Evgeni Malkin!"

Before I could respond honestly, I realized the absurdity of the situation. How could I be mistaken for Evgeni Malkin?? I don't look Russian, I don't speak Russian, and I have as much experience playing hockey as I do playing the ukulele. I'll never know if it was the jet-lag or the fact that I knew I would never see this guy again, but I slowly said "No......I...PLAY with Evgeni Malkin".

We arrived at the hotel; my driver jumped out, opened my door, grabbed the bags, and eagerly dove back into the front seat. He re-emerged with a scrap of paper and a pencil. In a moment that can only be described as pure hilarity, my new biggest fan handed me the writing utensil and said "Please sign!"  There was really only one thing left to do...

I scribbled my name, wrote "#28" next to it, and gave him a firm handshake.  After checking into the hotel I strolled to the elevator and texted my (much more sports-minded) brother, "Who is number twenty-eight on the pens?" As the elevator door closed...."Nobody. That number is not on the roster this year" came the response.




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