The 7% club

In an article of Bloomberg, the 2020s are described to be the Asian decade, with the continent dominating an exclusive list of economies expected to sustain growth rates of around 7%.

India, Bangladesh, Vietnam, Myanmar and the Philippines should all meet that benchmark, according to a research note Sunday from Madhur Jha, Standard Chartered’s India-based head of thematic research, and Global Chief Economist David Mann. Ethiopia and Côte d’Ivoire are also likely to reach the 7% growth pace, which typically means a doubling of gross domestic product every 10 years. That’ll be a boon to per-capita incomes, especially for Vietnam, they estimate.

Seven economies set to grow at around 7% through 2020s, with surges in per-capita GDP, Standard Chartered Bank says:

Source: Standard Chartered, using World Bank, International Monetary Fund, United Nations data

 

The South Asian members of the group should be GDP standouts as they’ll together account for about one-fifth of the world’s population by 2030, Standard Chartered reckons.

While faster economic growth isn’t a panacea -- think income inequality, crime, pollution -- it tends to come with a lot of positive knock-on effects, Jha and Mann wrote.

“Faster growth not only helps to lift people more quickly out of absolute poverty, but is also usually accompanied by better health and education, as well as a wider range of -- and better access to -- goods and services,” they say in the report. “Higher incomes resulting from faster growth also usually reduce socio-political instability and make it easier to introduce structural reforms, creating a virtuous cycle.”

In addition, 7% club members tend to have savings and investment rates of at least 20-25% of GDP, according to the report.

 

Routes to the 7% club

1) Export- or supply-driven commodity boom

2) Recovery period after intense economic or political weakening

3) Overheating, including monetary expansion or a real-estate boom

4) Export-oriented industrialization, especially in manufacturing 

 

For several years, EWD-Compass has also been doing business in Vietnam, with an office in Ho Chi Minh. We have experienced ourselves that there are many opportunities in Vietnam, and we think that it will only expand and improve further, especially in terms of production and labour conditions.

Do you want to explore the opportunities in Vietnam? Contact us for more information.   

 

(Source: Bloomberg)

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