New emerging markets in spotlight

For years, the four emerging markets — Brazil, Russia, India and China (Bric) — have attracted investors from around the world. Their firepower has certainly not flickered out, but some investors are now looking beyond them.

According to Euromonitor International, a provider of global business intelligence and strategic market analysis, the tide of investor interest is drifting towards the shores of less celebrated countries like Argentina, Egypt, Indonesia, Mexico, South Africa, Turkey and Vietnam.

They are what financial experts call the "Future 7", the next emerging market economies that have witnessed significant growth in youth and urbanized populations, as well as rising incomes and expansion of the middle class.

Other analysts, however, suggest the list also includes Bangladesh, the Philippines, Iran, Nigeria and Pakistan.

"I would call them all frontier markets. This differentiates them from the more established emerging markets," noted Steve Gregory of Holborn Assets.

Expanding strength

While there's no telling yet whether these countries will ultimately outpace the growth of Bric economies, their strength is definitely expanding.

The gross domestic product (GDP) per capita levels in the F7 economies alone are higher than in Bric countries. Their working-age residents are also growing in numbers and are expected to outnumber those in emerging markets.

Media Eghbal, countries and consumers editor for Euromonitor International, noted that by 2020, the population in F7 economies will account for one in 10 global consumers and their per capita disposable incomes are set to rise by 52 per cent in real terms beginning 2009.

The impact of ageing populations and increasing levels of debt in developed economies are making these markets important for the global economic growth. Eghbal said that by 2020, four of the F7 will emerge as among the world's top 20 biggest economies.

The economic development in these countries is expected to fuel the growth of residents' wealth. Investor interest and an openness to global trade, as well as rising domestic demand will also drive growth, aiding consumer incomes.

"The number of households in the F7 with a disposable income over $10,000 (Dh36,722) will nearly double in the next decade," Eghbal told Gulf News.

Eghbal said the Bric economies will continue to be driven by rapid growth in China and India, in particular.

"However, the F7 economies are still important as they account for one in ten global consumers and will offer sustained economic growth, enabling long-term investment potential," he noted.

"While the F7 will outpace Bric growth in the number of households in the next decade and in their working-age populations, this is because China's one-child policy and Russia's population decline will weigh on population growth and labour markets in the future.

"The F7 also accounts for 10 per cent of the world's population, but its share of global gross income is five per cent, while the Bric countries account for as much as 42 per cent of the global population, but only 13 per cent of global income," Eghbal said.