Transcript powerpoint slides

Emerging Markets In The Spotlight
The Six Most Promising Economies in Asia, Africa and Latin America
Atradius Dutch State Business
Bert Burger
ICTF's International Credit Professionals Symposium in Europe, Madrid, May 22 - 24, 2016
Emerging Markets, Are They Promising?
■ Risk-on, risk-off financial markets > impact on portfolio investment flows
Turkey, South Africa and Indonesia vulnerable due to combination of
high external financing requirement and relatively low buffers
■ Growth slowdown China & low commodity prices
Mongolia, Mozambique, Zambia, Malaysia, Chile etc.
■ Monetary tightening in the US > stronger US dollar, weakening EM currencies
Not a real problem for now
■ World GDP growth still
driven by Emerging Markets
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Emerging Markets, Are They Promising?
Yes, but not all of them:
■ India
■ Philippines
■ Iran
■ Colombia
■ Peru
■ Kenya
Not any more (maybe never have been):
■ Mozambique
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India
The bright side:
■ Stable political situation, reform-oriented policy (Modi!)
■ High economic growth, relatively small exposure to China
■ Low commodity prices
COUNTRY
But:
■ Reforms go slow
India
Indonesia
Philippines
Thailand
Mexico
Peru
Human
World Bank
OECD
Development
Global
World Bank
Government
Country Class
Index
Competitiveness Doing Business Effectiveness
(out of 188)
(out of 140)
(out of 189)
(out of 209)
Latest
2014
2015
2016
2014
3
3
3
3
3
3
130
110
115
93
74
84
55
37
47
32
57
69
130
109
103
49
38
50
115
95
81
72
82
118
TI Corruption
Perception
Index
(out of 167)
2015
Index of
Economic
Freedom
(out of 178)
2015
76
88
95
76
95
88
128
105
76
75
59
47
■ Not easy to do business
■ High leverage corporate sector
vulnerable to interest rate rises & weaker rupee
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Philippines
Strength:
■ High economic growth (moderate impact China, strong domestic demand)
■ Current account helped by remittances
But:
■ Weak institutions, corruption
■ Inequality, elite dominates politics
■ Violence (Mindanao)
Unclear:
■ President Dutarte’s policy
5
Iran
Positive:
■ Favourable economic growth prospects
■ Current account surplus
■ Low public and external debt levels
But:
■ Political situation outlook unclear
■ Still sanctions
■ Western banks very cautious
6
Colombia
Good:
■ Good economic policy
■ High investments growth
■ Large reserves
■ Peace talks
Risks:
■ Low oil price
■ Internal dissent at FARC
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Peru
Positive:
■ Good economic policy (whoever wins the elections)
■ High and stable GDP growth, low inflation
■ Rising middle-income class
■ Solid public and external finances
■ Investment grade status, positive for FDI
Negative, but not so much:
■ Reliance on commodity exports
Source: IHS
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Kenya
Positive:
■ Diversified economy
■ Efforts to improve infrastructure
■ Improved access of population to financial services
■ Relatively well-developed financial sector
■ Low, well-financed external debt
Negative:
■ Terrorism & civil unrest
■ Weak public finances
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Mozambique
Good:
■ Natural resources
■ High investements growth, FDI
Bad:
■ Dependency on commodity exports
■ No diversification of economy
■ Weak public and external finances
■ El Niño
Ugly:
Poor governance
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What Makes A Country Promising?
Need to have (at least 4 of 6)
■ Sound economic policy
■ Strong institutions
■ Solid public and external finances
■ Developed infrastructure
■ Diversified economy
■ Political stability
‘Do Not Underestimate
Nice to have
The Human Factor’
■ Large population, middle class
■ Commodities (but not too much)
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