After the exceptional economic growth and prosperity witnessed by emerging markets like China, India and Brazil, the CIVETS, Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa are expected to be the growth leaders in the next decade.
As a whole, the CIVETS have appeal due to their large, young and growing populations, diversified economies, decent financial systems and political stability, when compared to their counterparties. Additionally, the Economist states that all six nations are relatively unhampered by high inflation, trade imbalances or sovereign debt woes.
On an individual basis, Colombia is rich in natural resources, in particularly oil, coal and gold, all commodities that are likely to see increased demand in the near future. Additionally, international investment has already started to make its way to the Latin American nation and consumer spending has started to elevate.
A similar tune has been hummed in Indonesia. The Asian nation has seen its economy nearly double in the past five years, driven primarily by increases in consumer spending, which constitutes nearly 90% of the nation’s GDP. Furthermore, Indonesia has the lowest unit labor costs in the Asia-Pacific region which makes it highly attractive for manufacturing activity and business investment. Lastly, nearly half of the nation’s population is under the age of 25, indicating that the workforce as a percentage of total population will likely balloon over the next 10 years. As a result, increased personal consumption levels in the nation will likely be seen, leading to further economic growth.
As for Turkey, trends for long-term growth remain favorable. The sixth largest economy in Europe, boasts a per capita GDP higher than China, Brazil, India and Russia as well as a public debt to GDP ratio of less than 40%. Additionally, Turkey is taking steps to increase exports to China and the Middle East, to diversify its revenue stream in addition to its exports to Germany, England, Italy and Spain. In fact, recent data indicates that exports to China rose by nearly 137 percent in April of this year as compared to a year ago.
South Africa is expected to reap the benefits of vast natural resources and the expected rapid economic growth of Africa as a whole. Growth has already prevailed in the nation, illustrated by GDP growth of nearly 5% a year from 2000 to 2008 and is expected to continue as investor sentiment has recently increased. As for Africa as a whole, growth is anticipated to be so significant that some expect the continent’s consumer, agricultural, natural resource, and infrastructure sectors to generate north of $2 trillion a year by 2020.
- iShares MSCI South Africa (NYSE:EZA)
- iShares Turkey (NYSE:TUR)
- Global X/ InterBolsa FTSE Colombia Index (NYSE:GXG)
- Market Vectors Egypt Index (NYSE:EGPT)
- Market Vectors Vietnam (NYSE:VNM)
- Market Vectors Indonesia Index ETF (NYSE:IDX)
Written By Kevin Grewal From ETF Tutor Disclosure: No Positions
Kevin Grewal is the founder, editor and publisher of ETF Tutor and serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was a quantitative analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor’s degree from the University of California along with a MBA from the California State University, Fullerton. He is a contributing author on The Street – his articles can also be found published on various sites including Yahoo! Finance, The Globe and Mail , Daily Markets, MSN Money, Seeking Alpha, Fidelity Investments, Traders Library, and Minyanville.