Emerging markets have been on a growth trend for two decades, surviving numerous global economic cycles to account for over 50% of global GDP. Despite recent volatility, we are confident that emerging markets will continue to capture an increasing share of global economic growth.
CONSUMER AND DEMOGRAPHIC TRENDS
With emerging markets consumer spending an important driver of global growth, the expansion of a consumer class across global emerging markets creates a strong backdrop for investment.
Urbanization trends within emerging markets serve to accelerate consumer spending. Nearly 800 million people are expected to move into emerging markets cities in the next decade. Average incomes for people in cities is up to three times larger than for those living in rural areas, leading to growing demand for new products and services.
In addition, the demographic profile of many emerging markets is conducive to greater consumer spending. Emerging markets benefit from younger populations as compared to developed markets. These younger populations have more disposable income and are eager to raise their standards of living, driving consumption in the process.
MANAGEMENT INNOVATION AND PRODUCTIVITY
The quality of management teams in emerging markets – a key criteria for investment and partnership success – has transformed over the last two decades. The expansion of multinationals and professional services firms into these markets, along with their excellent training programs, signifies that emerging markets company management is increasingly operating in accordance with global standards.
The macroeconomic position of global emerging markets has vastly improved over the last 20 years. Monetary and structural reforms implemented in response to crises in previous decades – such as floating exchange rates, fiscal restraint, and trade liberalization – have stabilized emerging markets economies over the last two decades. Good economic management has led to stronger and more stable investment flows, supporting the next stage of growth.