Despite the economic impacts of the Covid-19 pandemic, emerging markets will remain of interest to investors in 2020 and beyond because of the high reward potential offered by their rapid development.....
The economic agenda is often prioritized by government bodies in these countries. Market opportunities are presented by their growing young demographic, increasing urbanization and rising household spending power. Rapid technological development leaves the door open for these emerging economies to leapfrog development stages and make up lost ground relative to more advanced economies.
Markets in Asia are set to benefit from the signing of what could become the world’s largest trade bloc in 2020, the Regional Comprehensive Economic Partnership. Meanwhile, in Africa, the African Continental Free Trade Area comprises the globe’s largest bloc at present, with 54 of 55 African countries members as of June 2020, and has encouraged regional trade since 2019.
Which emerging markets are growing the fastest?
The emerging markets that are growing the fastest depend to a large extent on demographic advantages, and government priorities and regulation.
In addition to navigating the most severe economic effects of the Covid-19 pandemic, this means the most promising emerging markets for 2020 will include those where high-potential sectors have been clearly identified by policymakers and an ecosystem has been created to allow them to flourish – which makes emerging economies a particularly exciting investment opportunity for investors seeking to diversify their portfolio.
Examples of high-growth sectors in emerging economies include e-commerce in Indonesia, which has benefited from a large domestic market, improvements in infrastructure and increases in discretionary spending power; and the automotive and aerospace industries in Mexico, which have been bolstered by favorable regulations and trade deals.
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