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Nigeria and the Next 10 Economies to Watch

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Nigeria is one of the eleven economies to watch in 21st century, according to investment bank; Goldman Sachs and economist Jim O’Neill. Bangladesh, Egypt, Indonesia, Iran, Mexico, Pakistan, Philippines, Turkey, South Korea and Vietnam are also all in this category.

Goldman Sachs and Jim O’Neill classify these countries as Next Eleven. The classification is predicated on prevailing variables such as macroeconomic stability, openness of trade, promising outlook for investment and growth, and political maturity, as at December 12, 2005.

Eight years on, research has shown that there are other characteristics, probably overlooked, that make these economies tick.

The inflation rate for all the countries as at September 2013 are in single digits, except for Egypt and Iran. Nigeria’s inflation rate recently fell from 8.2 percent to 8 percent, according to the National Bureau of Statistics (NBS), agency responsible for data collection and management in Nigeria.

World Bank figures show Turkey’s inflation rate in September was 7.88 percent while Bangladesh’s was 7.13 percent. Indonesia’s, Pakistan’s and Vietnam’s rates were 8.40 percent, 7.39 percent and 6.30 percent respectively. In the same vein, Mexico’s, Philippines’ and South Korea’s were 3.39 percent, 2.70 percent and 0.80 percent respectively. Though Egypt‘s rate reached 10.15 percent in September, analysts say this is not too high, considering political upheavals in the country which have disrupted economic activities in recent times.

Iran’s inflation rate is 37 percent as at September, but analysts say this is attributed to international sanctions that have limited the activities of the Iranian Central Bank.

Single digit inflation rate ensures macroeconomic stability and instills confidence in the local currency. It is also a benchmark for low cost of living and low cost of investment, a situation that encourages foreign direct investment (FDI). It is equally a barometer for examining exchange rate control mechanism of a country, analysts say.

Apart from single-digit inflation, there is also a growing or resurgent middle-class among these economies. The African Development Bank’s (ADB) recent research revealed that the middle-class occupies 23 percent of Nigeria’s population. In Bangladesh, the size of the middle-class has nearly doubled to more than 30 million, according to Sahib Hussain, World Bank’s senior economist.

Express Tribune, Pakistan’s local newspaper, affirms strong resurgence of middle-class in Pakistan, confirming recent Bloomberg reports that consumer spending there has increased by 26 percent in three years.

In Mexico, citizens are beginning to accept that the nation is a middle-class one following changes in demands patterns. The country’s statistics institute, INEGI, said middle-class occupies 39.2 percent of the population. Also, reports from Turkey show rising middle-class has prompted growing tastes for Islamic fashion.

BBC analysis in July this year acknowledged strong presence of middle-class in Egypt, though it added there are fears many of them would leave for elsewhere, owing to tense security situation. Mario Pezzini, director, Organisation for Economic Co-operation and Development (OECD) recently said middle class has enabled Korea to shift away from export-driven growth towards domestic consumption. Also, a recent Forbes’ report revealed that Vietnam has discovered a consumer society.

The developing world’s emerging middle class is a critical economic and social factor because of its potential as an engine of growth, particularly in the largest developing countries, says Pezzini. Analysts also say consolidating the middle income group into a stable middle class could provide a solid foundation for economic progress by driving consumption and domestic demand.

Moreover, the majority of the countries are characterized by large population, which provides large and expansive markets for their products. The World Bank says Nigeria is populated by 168.8 million people; while Bangladesh is made up of 154.7 million people. Mexico, on the other hand, has 112.3 million people; Pakistan, 183 million; while Indonesia is populated by 246.9 million people.

Countries with less population include Egypt (80. 72 million), Iran (75 million), Philippines (96.71 million); Turkey (74 million people); South Korea (50 million) and Vietnam (88.78 million).

According to Krishna Kant, writer for Economic Times of India, a bigger population means more consumers, and more workers to work in factories and software technology parks.

‘’And you don’t need to be an economist or scientist to understand this basic link between economics and people. After all, gross domestic product (GDP) is nothing but production of economic goods and services consumed and demanded by individuals and firms and produced using labour and non-labour factors of production. So everything remaining the same, a bigger population is always a good thing for an economy,’’ concluded Krishna Kant of the Economic Times of India.

The view of analysts is that these eleven markets provide great opportunities for investment in foods and beverages, technology, textiles, leather tanning and real estate.

Article Credit: Business Day Newspaper

Updated 5 Years ago

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