The most promising emerging markets in international trade have been revealed by economists at leading trade credit insurer Atradius.
Chile, Egypt, Senegal, Malaysia and Vietnam have been named by Atradius as the most promising emerging markets for 2021. In its Promising Markets 2021 economic report, Atradius forecasts that despite the backdrop of a global recession which has seen economies around the world rocked by the coronavirus pandemic, these five markets are expected to recover well with strong prospects for investors and exporters. The markets all benefit from relatively stable political conditions with many having a growing middle class, generating opportunities in consumer-oriented sectors.
Damien Dawson, Regional Manager for Atradius UK’s Southern Region, commented: “The unexpected and devastating impact of Covid-19 brought the global economy to a standstill and the situation is still precarious. However, the scene has been set for renewed hope in 2021. As economies slowly reopen, pent-up demand and a recovery in exports will gradually stimulate growth in 2021 and bring with it new opportunities for trade. The promising emerging markets identified by Atradius are positioned to emerge with good growth prospects across several sectors with favourable business conditions.
Promising emerging markets for 2021:
- Chile: Chile proved to be resilient against the Covid-19 shock and, with a relatively diversified economy and the fastest expected vaccine rollout in the region, is well placed for a robust recovery. Export revenues benefited from a recovery in the copper price, Chile’s main export product. Agriculture, packaging and pharmaceuticals are the best performing sectors with increased demand for machinery and industry-related technology.
- Egypt: With a stabilising political landscape, reforms and GDP growth outperforming its regional peers, Egypt has displayed a strong growth trajectory. New gas discoveries will expand gas exports and support Egypt’s ambition of becoming a Mediterranean gas hub with additional investment in renewable energy. The government focus on a digital economy will offer opportunities for ICT companies while demand for pharmaceuticals will be driven by a growing population and higher healthcare spending. The construction sector will benefit from several infrastructure projects alongside the completion of the new capital city.
- Senegal: Growth will be driven by construction of hydrocarbons projects and by new exploration and expansion in the minerals sector, notably gold. Oil and gas production is due to commence from 2022, giving rise to substantial investment opportunities. The government-adopted development plan will focus on improving productivity, rail and rural road construction and the electrification of villages. All of this will create important long-term opportunities for capital goods exporters and providers of transportation, storage and logistics services.
- Malaysia: Its attractive business climate, quality of infrastructure, skilled workforce and strong trade links makes Malaysia a bright spot in Asia while its competitive position in manufacturing is bolstered by rising wages in China. The acceleration of global growth makes 2021 an attractive year for export-oriented sectors in Malaysia such as electronics and agriculture. Healthcare-related plastics and rubber manufacturers saw annual growth of 212% as demand for rubber gloves and packaging increased during the pandemic while infrastructure also provides attractive investment opportunities.
- Vietnam: Managing to avoid recession in 2020, Vietnam is a regional outperformer for exports and one of the fastest growing ASEAN economies. After a difficult 2020, the transportation and logistics sector has strong growth potential as global demand picks up. Textiles is set to benefit from stronger global demand and recent free trade agreements with the EU and UK. Higher private consumption offers compelling opportunities for businesses, particularly in retail and consumer goods. Meanwhile, growth in building and real estate investment is likely to help the construction sector while renewed demand for pesticides and fertilisers will support the agriculture sector.
Damien Dawson added: “The pandemic has disrupted global trade and changed the horizons for exporting businesses. Success will depend on a business’ ability to innovate and seize new opportunities while being armed with the right tools and insights. Comprehensive risk mitigation, protection from non-payment and real-time information combined with an agile response is essential.”