No gold for Brazil as BRICS nations suffer

Low crude oil prices and US and EU sanctions have been hurting.

China is striving to transform itself from an export and capital investments-driven economy into one based on domestic consumption and services. Growth in the coming years is expected to be just over six per cent, the lowest rate since China began entering the global economy back in the early 1990s.

South African GDP per capita has slumped from $8,656 to $5,994. The unemployment rate remains stubbornly high at 25 per cent.

Only India is holding up – strong public investment boosted growth to 7.6 per cent in 2015.

So where else might we look for emerging market gold medal prospects?

Bangladesh has managed to keep its growth galloping along at six per cent since 2003. According to International Monetary Fund forecasts, it is expected to flourish in the coming years, raising its GDP from 58th to 42nd place among world economies.

Over the past decade, Ethiopia has been surging at an impressive 10 per cent a year.

It is heavily dependent on agriculture, which accounts for 42 per cent of the country’s income and the livelihood of 85 per cent of its people, but the government is eager to diversify by promoting potential growth sectors such as textiles, energy and services, with a substantial investment in tourism planned.

One of the most promising emerging markets is Myanmar, formerly known as Burma.

The return to democracy from military rule has seen sanctions lifted, and the country is opening up to the world. With further reform in prospect, analysts have Myanmar continuing to grow at eight per cent per year until 2020.

The Philippines has made a major leap forward in recent years, growing at an average 6.5 per cent since 2012, helped by an improving job market and significant cash flow from the millions of Filipinos working abroad.

Vietnam has ramped up development efforts and liberalisation.

Although nearly half of the workforce is employed in agriculture, industrialisation and development are speeding up as the country modernises.

Thailand’s government has been pursuing pro-growth agendas and seems committed to extensive mar- ket-friendly reforms and infrastructure investment, which should be an important driver of economic performance, helped by a rise in tourism and domestic demand.

No discussion of emerging markets would be complete without Indonesia.

The burgeoning middle class is driving up demand, which, along with government investment in infrastructure, is set to ensure a 5-6 per cent growth rate in coming years. With the IMF expecting Indonesia to overhaul Brazil by 2018 and Russia by the end of the decade to take sixth place in the world, a major shift in the economic balance of power appears to be taking shape among emerging markets.

The message for investors is that most portfolios should have some exposure to emerging markets... and probably more exposure than in times past.

However, hold onto your seats because it is likely to be a bumpy ride. Trevor Law is managing director of Merito Financial Services, chartered financial planners,

based in Solihull. Email:tilaw@meritofs.com