Global Business Development

An Update on Countries as Places to Do Business in 2018

Our company conducts country and regional market analysis for our clients who are considering what countries to take their business into. We tap into more than 25 international information sources and the real-time knowledge of our GlobalTeam™ members on the ground in 43 countries. Here are some snippets from our recent research in key countries at the start of the second quarter of 2018.

The International Monetary Fund (IMF) predicts 3.7% global growth for 2018, the highest level in 10 years. While risks to global growth include political meltdowns, economic disasters, wars and unrest, investment risk, and intellectual property concerns, economic growth is robust in many parts of the world.

The Americas

Argentina – After 20+ years in the economic, exchange rate, and political wilderness, the Latin American & Caribbean Director of The Economist Intelligence Unit noted in a recent webinar that Argentina is now in a new period of extended, stable economic growth. Structural reforms, business friendly policies, less regulations, higher levels of direct foreign investment; dropping interest rates and efforts to lower the public deficit have resulted in an expected level of GDP growth of about 3% over the next few years.

Brazil – For the past five years the economy has stalled, inflation has been high, and there have been numerous government and corruption problems. A recent Wall Street Journal article (March 1, 2018) stated, “Brazil’s economy returned to growth in 2017 (1.0%) after two years of contraction . . . Gross Domestic Product (GDP) increased 2.1% in the fourth quarter of 2017 from the same period a year earlier. Economist magazine expects Brazil to grow 2.6% this year and 2.8% in 2019. This will mean new investment opportunities.

Peru – GDP growth is expected to be 3.9% in 2018. This has been the fastest growing economy in Latin America for many years. The government is pro new business creation because this means new and better jobs for their people.

Asia Pacific

China – The Chinese consumer economy is growing at over 8% per year. The middle class is approaching 300 million people. There are 160 cities with a population of more than 1,000,000 people. In 2016, Shanghai and the two adjacent provinces had a combined GDP of that of Italy and Mexico combined. Today’s Chinese consumers want the quality, brand, convenience and service associated with Western brands.

As excellent example of the spending Chinese middle class consumer is the fact that in 1990 less than 1 million Chinese took a commercial airline flight. In 2017 over 600 million Chinese flew a commercial airline flight.

Indonesia – The world’s fourth most populous nation is experiencing a rapid expansion in the middle class, which includes over 30 million households.  Like many other Asian countries, the middle class in Indonesia is characterized not only by their purchasing power, but also their generally higher levels of skills and education.

Japan – Although Japan has an expected GDP growth rate of 1.5% in 2018, this is up considerably from past years. There has been a transformation of Japanese consumer spending patterns in recent years. Consumers are spending money on physical experiences rather than purchasing tangible goods and products.

The Philippines – Growth in disposable income has resulted in a more comfortable and better lifestyle. This has contributed to the growing sophistication of consumers across age, income and gender groups. A very strong acceptance of social media allows businesses to connect with the young middle class consumer.

Europe

2017 was Europe’s strongest year of economic expansion in over a decade, with average Gross Domestic Product (GDP) growth of 2.5%. In 2018, Ireland is expected to lead the pack with GDP growth of 4.1%, with estimated growth rates of 2.4% in Germany and even 2.1% in France which is its best performance in years. While 2018 will feature a great deal of political melodrama as negotiations between the EU and United Kingdom occupy headlines, the economies of this region are moving ahead strongly and this is good news for new franchise development. Consumer confidence is the highest it has been in decades and average unemployment is at a nine-year low.

Italy – The expected relatively low 2018 GDP growth rate of 1.5% is offset by increased business investment and significant household consumption. Most of the new investment in 2018 will be in the north centered around Milan.

Poland – Economic growth remains strong. Rising social transfers and a booming labor market are underpinning rapid consumption growth. The unemployment rate is at a record low level, labor shortages are spreading, and there are early signs of accelerating wages. The labor market is expected to tighten further, leading to somewhat faster wage and price inflation.

Spain – With 2018 GDP growth estimated at 2.7%, Spain is benefiting from a dynamic economy, record levels of tourism, rapidly declining unemployment, and domestic consumption and new business investment.

Middle and Near East

United Arab Emirates – The International Monetary Fund (IMF) expects GDP to recover from recent oil and gas price woes to grow at 3.4% in 2018. The UAE has three major consumer types: (1) the local Emiratis (about 400,000); the ex-pat foreigners who work at the regional headquarters of international companies; and the high number of tourists who come to the UAE because it is a regional vacation and shopping opportunity.

India – This country is set to be the fastest growing economy in the world again in 2018. The World Bank says India’s growth is expected to be over 7% in 2018, overtaking China. The World Bank believes strong private consumption and services are expected to continue to support economic activity. Exports for the last month that data is available rose 30% year over year. The Purchasing Managers’ Index expanded the fastest it has in five years. At least one international ratings agency has upgraded India’s credit rating.

For further information on how we might help your company realize its full global potential, contact William Edwards on +1 949 224 3896 or at bedwards@edwardsglobal.com.

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