The Emerging Markets: Economic Outlook

The International Monetary Fund has forecast that over the next few years, around 70 percent of world growth will come from developing countries. Emerging economies - such as Nigeria,Indonesia, the Philippines, Saudi Arabia and Mexico - are expected to see significant growth over the coming decade. Economic advances in these countries has supported the world economy through tough financial periods in recent years, with particularly strong development in the construction, real estate, and technology sectors.

Looking forward to 2015, the economies of emerging markets in Southeast Asia, Latin America, the Middle East and Africa are projected to further strengthen. Due to rising domestic imbalances and a challenging external environment, Southeast Asia’s gross domestic product (GDP) growth in 2012-2013 was below average for the past decade; despite setbacks and lower than expected growth levels in the first half of 2014, a steady GDP growth is projected for the coming years. Figures from the OECD Development Centre’s Medium-Term Projection Framework (MPF-2014) reveal that the real gross domestic product (GDP) rate in Southeast Asia is forecast to average 5.4 percent per annum between 2014 and 2018.

Paul-Philipp Hermann, Co-Founder and Managing Director of Lamudi, commented: “GDP strengthens the property market in the emerging countries. Alongside the rapid growth of internet technologies, less developed countries in Southeast Asia, Africa, the Middle East and Latin America are emerging as competitive players in the global real estate market, and thus becoming increasingly attractive to investors.”

Figures from the World Investment Report 2014 , published by the United Nations Conference on Trade and Development (UNCTAD), reveal that foreign direct investment (FDI) inflow into Africa increased by four percent to $57 billion in 2014.

As a result of infrastructure developments, emerging middle classes and local innovation, industries such as automotive, IT, construction, real estate and retail are becoming increasingly attractive investment opportunities. Developing nations in Asia accounted for almost 30 percent of the global FDI total in 2013, with a total inflow of $426 billion. In Southeast Asia, inflow increased by seven percent, to reach $125 billion. In Latin America, Colombia has experienced an eight percent increase to $17 billion in 2013, providing exciting new opportunities for foreign investors in the financial industry.

The emerging markets present an impressive number of opportunities for investors. FDI Intelligence reports that in 2013, Asia-Pacific remained the leading destination for foreign direct investment, with projects bringing capital investment to $184.76 billion. The Middle East, Latin America and the Caribbean, both saw strong growth in greenfield FDI, with major growth recorded in Jordan and Mexico. Africa also saw an increase of 10.76 percent in inward capital investment from 2012 to 2013, attracting $51.98 billion. According to FDI, the top five sectors by capital investment in 2013 were: coal, oil and natural gas; communications; renewable energy; business services; and real estate.

Most emerging markets have large, young working populations. The Middle East, Africa and Latin America have the largest number of citizens under 30 years old, with countries such as Mexico, Jordan, Saudi Arabia and Nigeria home to some of the world’s youngest populations. According to market intelligence firm Euromonitor International, emerging and developing countries house 89.8 percent of the global population under the age of 30 - up from 85.3 percent in 1980. These young populations are not only contributing more to the economy through work, but also spending more on consumer goods and more enthusiastic to spend time and money on technology.