Growing emerging market economies offer significant opportunities, says Eurasia Group
A report by Eurasia Group highlighted the risks and opportunities presented by emerging markets.
The strong performance of emerging market economies relative to their industrialised counterparts following the 2008 financial crisis highlights how important develop¬ing markets will be for businesses in the years to come, said Eurasia’s report.
Most large developing countries are currently enjoying a period of relative political stability, which will likely mean they will pursue consistent poli¬cies and remain committed to economic reform, continued the report.
The analysts believe that the downturn in the industrialised West has led emerging markets to focus more attention on developing their own economies and this bodes well for companies looking to take advantage of growing consumer demand in these markets.
Wage pressures pose a risk to their competitiveness, however, although many markets, such as China, will retain a competitive ad¬vantage with respect to cheap labor. Excessive dependence on commodities also poses a big risk to the economic well being of emerging markets.
In the future, moves to diversify emerging market economies could offer significant opportunities for business in infrastructure, manufacturing, and technology. But an ongoing risk for multinationals will be the growth of national champions that enjoy generous government protection.
Infrastructure is a particularly high priority for most governments and is therefore one of the most attractive areas for investment while the consumer and high-tech sectors also show promise, said Eurasia’s analysis.
And companies with an edge in clean energy technologies will benefit from new opportunities in China as Beijing pursues its green energy goals, predicted the research.
Read more on the emerging markets:
StrategicRISK Emerging Market Special Report
