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Written by: Thomas Kostigen
As the world begins to open from the COVID-19 pandemic shutdowns and countries begin to report the tolls on their economies, it’s worth understanding which places are poised for growth and which will face challenges.
Smart investors will be scoping opportunities in upswinging economies. And there are numerous investment vehicles at their disposal to reach both foreign and domestic opportunities.
For the purposes of this column, we’ll be looking at global opportunities. In the investment world, “global” means all countries, while “international” means all countries outside your particular domicile.
According to Focus Economics, which provides forecasts and economic analysis on 131 countries, the world’s fastest growing economies are: India, Bangladesh, Rwanda, Vietnam, and Cambodia.
India ranks first because “While the country was hit hard by the Covid-19 pandemic and an ensuing harsh lockdown last spring, infection rates have fallen sharply in recent months, the domestic vaccination campaign is now underway,” Focus says. “Surging consumption, investment and exports will spur growth in the coming years.”
Bangladesh’s “robust remittance inflows and recovering industrial production have aided the recovery in recent months. Looking forward, rapid export growth and stronger domestic demand should drive the economy,” Focus says. Rwanda should see real GDP growth average 6.7% from 2021 to 2025. “Activity should be supported by surging investment. However, a fragile fiscal position, low domestic savings and expensive energy pose downside risks,” Focus says.
“Vietnam has been one of East Asia’s star performers in recent years, spurred by a stable political climate, low labor costs and a relatively skilled workforce. The country has been highly successful at luring foreign direct investment, particularly into the fast-growing electronics and garments sectors. Vietnam is also an attractive base for firms looking to relocate from China due to the U.S.-China trade spat, and has signed a host of trade deals that boost market access for its goods,” according to Focus.
Lastly, Focus says Cambodia’s economy should return to a strong growth trajectory this year as the impact of the pandemic fades and foreign direct investment remains strong. Notice any themes? All but one of the fastest growing economies is in Asia. Another shared theme for outlier Rwanda is foreign direct investment. And garment exports are a big driver of the countries that can expect big growth in the coming years.
India’s economy is expected to grow 7.2% through 2025, with massive 13.5% year-over-year growth in 2022 lapping up the negative 6.7% expected this year. Bangladesh is expected to grow 6.9% through 2025, just topping Rwanda. Vietnam will tie that number. And Cambodia should see 6.6% growth over the next four years.
A good financial adviser should be able to help you gain exposure to these markets through a well-managed mutual fund or exchange-traded fund. Why is it worth looking outside this country for growth opportunities? According to the Congressional Budget Office, or CBO, the U.S. economy is poised to grow at just under 2% for the same period as the countries listed above. Would you trade domestic exposure for three times the return in international markets? That is the question for you and or your financial adviser to answer.
Thomas Kostigen is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Thomas is a best-selling author and longtime journalist who writes about environmental, social, and governance issues.