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Emerging markets: judging by GDP

As China’s GDP per capita income is lower than that of Spain, it continues to be misleadingly categorised as an emerging market, despite having the largest economy in the world, a literacy rate of 96 percent and more high speed rail tracks than any other nation. This has drawn me to look at the recent GDP figures released by the OECD, and what they might mean for some of our member firms around the world.

In this blog, we examined the MINT economies (Mexico, Indonesia, Nigeria, and Turkey),and their growth figures allow us to reflect on some of their success stories. Predictions suggest that Indonesia will become the seventh largest economy by GDP by 2050. Although their GDP has grown by 1.1 percent, the country’s growth has significantly slowed down since the previous quarter. Indonesia is now working to solve the decline in pace, which analysts suggest was down to lax domestic policies. The country has boosted import duties on several consumer goods, and levies have been dramatically increased on products such as meat and coffee, in order to support a local economy which had suffered from spiraling inflation.

In 2014, we reflected that the year started badly for Indonesia with reports that its economic growth had fallen to its slowest pace in five years, following a severe market downturn in 2013. It is good to see concrete measures to improve matters in this country which promises to deliver so much to the international business community.

A blog on Turkey registered a similarly lukewarm tone, but the nation has fought back in the face of a vast deficit and political unease to become a hot-spot for investors, and as a result, their GDP figures have increased by 1.3 percent. However, the country is in a difficult economic position due to its need to encourage private saving for stability and the prevention of more borrowing. Encouraging saving would decrease consumer spending by approximately 3 GDP percentage points, which is particularly significant for an economy where 70 percent of the total GDP figure is generated by consumer spending. Turkey is a fascinating area for RSM because the country relies heavily on foreign direct investment and the money raised through merger-and-acquisition financing, which brings many opportunities for us to have an active role in the development of the wider economy.

We are represented in the Czech Republic, another emerging market, by RSM Tacoma. Analysts predict that there will be 2.5 percent growth this year after expansion in their exports, with significant development in the production of cars, tools and engineering components. There were concerns that the Czech Republic would suffer greatly from the Greek crisis, however, it appears that their bond markets are more closely affected by Germany and France than Greece.

The resilience of all of these countries highlights the flexibility of the marketplace. Whilst GDP figures do not always give an accurate representation of a country’s financial success or where problems lie, they do form a measure for comparison in different areas, and an indication of the impact of the global economy on individual countries. As a global network, international business is at our heart, and the opportunity to provide professional services in a variety of financial conditions leads to greater ingenuity and adaptability, to which we constantly aspire.

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