 Investment opportunities in Emerging Europe's frontier markets (Armenia, Azerbaijan, Belarus, Bosnia, Georgia, Kazakhstan, Macedonia, Mongolia, Serbia and Ukraine) are proliferating, but remain distinctly less well understood, whereas in Russia, Poland and the Czech Republic, the engine rooms of regional growth, opportunities are starting to diminish as incumbents – both domestic and international – entrench their market share. Against this backdrop, BMI's clients are reassessing their Emerging Europe growth strategies, whether based on organic expansion or acquisition. The Business Outlook for Emerging Europe’s Frontier Markets 2008 argues that, as your competitors gear up to the new era, it is imperative to start focussing now on the opportunities (and risks) in other high growth markets where the competitive environment is less challenging.
The Business Outlook for Emerging Europe's Frontier Markets 2008 provides essential risk analysis and market forecasts for these high growth 'Frontier Markets'. It highlights the opportunities available for investors looking to exploit the domestic market in commodity producers, such as Kazakhstan, Mongolia and Azerbaijan, where growth rates will remain well in excess of more developed states. Importantly, the report also highlights the disparate growth paths across the region, drawing out the country-specific risks and potential among the economic liberalisers – such as Armenia, Georgia and Ukraine – and states – such as Serbia, Bosnia and Macedonia – where prospects for EU convergence drive potential.
Why Frontier Markests?
- Strong macroeconomic growth - which translates into high earnings potential for domestic companies and investors
- Rapid economic development – will means huge opportunities for capital investment across all sectors servicing the local economy – utilities, communications, transport, industry
- Diversification hedge – these states offer unique opportunities to exploit opportunities in states where growth dynamics do not correlate with more established states
- 'Last decade costs' – low labour costs in contrast to more developed states will confer competitive advantage to those able to unlock the potential
Why you need to order this report today:
Strategists - Scope out the commercial opportunities available within Emerging Europe’s smaller markets, and, more importantly, the synergies available to your company’s core regional strategy via diversification, cost reduction and new market acquisition.
Risk Managers – Develop a broader understanding of the risk/reward trade-off for both your existing business model and more innovative growth strategies via a more holistic view of the Emerging Europe market.
New Business Managers – Assess the relevance of your current portfolio of products/services for these rapidly-growing markets where those that offer greater differentiation stand to benefit most.
Financial Planners – Critically evaluate the assumptions underpinning your medium-term financial forecasts by incorporating BMI’s economic assumptions of Frontier Emerging Europe states into your projections.
Extracts from The Business Outlook for Emerging Europe’s Frontier Markets 2008
Diversification benefits – While the performance of Frontier Markets is linked to the global economy, organic growth drivers – especially within commodity producing states – are more significant. The result is that while there are country-specific risks, investment and trade with these states offers a hedging strategy against falling performance elsewhere.
Immunity from the US downturn for some... – There are demand-side risks to oil and other commodities associated with the US slowdown. However, with fears over supply constraints the key factor determining prices in 2008, energy and other commodity producing states such as Kazakhstan, Azerbaijan and Mongolia will shrug off the 'credit crunch'. This leaves them well placed to maintain rapid growth rates in 2008 and beyond.
...Increased risk for others – Economic liberalisation has driven the performance of Armenia, Georgia, Ukraine and Belarus. However, while this will cement long term prospects, the recent reliance on capital inflows to drive investment and therefore economic growth leaves all four states vulnerable to the credit crunch.
EU convergence still a potent force – Serbia, Bosnia and Macedonia will all benefit from increased investor confidence emanating from the improvement of regulatory and economic policies to EU standards. The Czech Republic and Slovenia are models that these states can – and are – emulating.
Political risks remain – While the rewards are significant, so are the risks. The temptation to yield to populist demands for more government spending is a key risk in many states where the spectre of inflation is beginning to loom once more. Furthermore, the 1990s cannot be forgotten. Ethnic divisions in Macedonia, Bosnia, Serbia, Georgia, Azerbaijan and Armenia risk holding back the reform process.
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CONTENTS
Growing Fast On The New Frontier
- Chart: Frontier Markets To Lead The Growth Race
Top 20 Countries Projected Real GDP Growth From 2008-2012,%
- Table: Frontier Markets - key data and projections for top 10 countries
- Table: gdp per capita, us$ (in order of % increase)
Frontier Investment: Potential And Pitfalls
- Diversification Benefits
- Table: Diversify through Frontier Markets - correlation coefficients Jan 2004 - April 2008
- Index Development A Positive Step
- Official Agencies Playing A Part
- Table: Frontier Market Indices
Europe Frontier Markets Introduction
- Armenia – Assessing The Economy’s Long Term Potential
- Table: armenia - economic activity
Period 2003-2012, Nominal GDP (AMDbn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn), industrial production index (% y-o-y, ave), unemployment
(% of labour force, eop)
- Azerbaijan – Is The Oil Sector Too Dominant?
- Chart: Energy Fuelled Growth
Azerbaijan - Oil Sector, Contribution To GDP (%)
- Chart: Non Oil Sector Lagging Behind
Azerbaijan - Real GDP Indicators
- Table: Azerbaijan - Economic Activity
Period 2003-2012, Nominal GDP (Azmbn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn), unemployment (% of labour force, eop)
- Belarus – At An Inflexion Point?
- Chart: Higher, Ever Higher
Belarus - GDP Indicators
- Table: Belarus - Economic Activity
Period 2003-2012, Nominal GDP (byrbn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn), unemployment (% of labour force, eop)
- Chart: Near The Top Of The Class
Europe - 2008 Real GDP Growth, % (Leading States)
- Chart: Rising, But Under Control
Belarus - External Debt Indicators
- Table: belarus - foreign debt
Period 2003-2012, foreign debt (us$bn), foreign debt (% of gdp), foreign debt (% of exports)
- Bosnia – Making Up For Lost Time
- Chart: Still Solid
Bosnia - Industrial Output Growth, %
- Table: Bosnia - Economic Activity
Period 2003-2012, Nominal GDP (bambn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn)
- Georgia – Foreign Investment To Remain Key
- Table: Georgia - Economic Activity
Period 2003-2012, Nominal GDP (gelbn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn), unemployment (% of labour force, eop)
- Kazakhstan – Short-Term Pain, Long-Term Gain
- Chart: The Economy Will Recover... Eventually
Kazakhstan - GDP Figures
- Table: Kazakhstan - Economic Activity
Period 2003-2012, Nominal GDP (kztbn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn), industrial production index (% y-o-y, ave), unemployment
(% of labour force, eop)
- Macedonia – Growth To Average 5.6% Through To 2012
- Chart: Industrial Production To Drive Economic Growth
Macedonia - Industrial Production, EOP & Real GDP Growth And Export
- Table: Macedonia - Economic Activity
Period 2003-2012, Nominal GDP (mkdbn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn), industrial production index (% y-o-y, ave), unemployment
(% of labour force, eop)
- Mongolia – Minerals To Drive Economic Boom
- Chart: Outlook Good
Mongolia - GDP Growth and Per Capita Figures
- Chart: Export Growth To Lift Current Account
Mongolia - Current Account Figures
- Table: Mongolia - Economic Activity
Period 2003-2012, Nominal GDP (mntbn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn), unemployment (% of labour force, eop)
- Serbia – Economic Growth To Remain Robust Over The Long-Term
- Table: Serbia - Economic Activity
GDP per capita (US$), population (mn), industrial production index (% y-o-y, ave), unemployment
(% of labour force, eop)
- Ukraine – Metals Key For More Solid Growth
- Chart: Strong Domestic Demand
Ukraine - GDP by Expenditure, % change y-o-y
- Chart: Solid Picture
Ukraine - GDP by Output, % change y-o-y
- Table: Ukraine - Economic Activity
Period 2003-2012, Nominal GDP (uahbn), Nominal GDP (Us$bn), real gdp growth (% change y-o-y),
GDP per capita (US$), population (mn), industrial production index (% y-o-y, ave), unemployment
(% of labour force, eop)
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