Asian countries constitute 9 out of the top 10 leading growth markets in Maplecroft’s latest ranking. India leads the pack, followed by China, Indonesia, Malaysia, Bangladesh, Saudi Arabia, the Philippines, South Korea, Vietnam and Singapore. Saudi Arabia is the only non-Asian country included.
India’s untapped economic potential, especially its upwardly mobile youth population, has seen it overtake China to top Maplecroft’s 30 leading growth markets in the annual Growth Opportunities Atlas (GOA). China is, however, a close second.
In the 15 years to 2025, Asia will increase its share of the global middle-class from 51% to 58%, with the two countries topping Maplecroft’s leading 30 Growth Markets, India and China, accounting for an estimated 19% and 23% of the global total respectively.
While China will continue to enjoy strong growth in the short-term, the reforms promoted by Xi Jinping at the 3rd Plenum will enable a more sustainable and consistent rate of expansion in the longer-term. By providing greater security for internal migrants and those in rural areas - through hukou and land rights reforms - and by reducing the financial repression of savers, these reforms should pave the way for domestic consumption across the economy to rise as unprecedented levels of investment gradually reduce.
India’s move to first place in the GOA reflects its greater potential for ‘catch-up growth’ than China. Its working-age population is set to expand by 25.9%, from 790 million to 995 million, between 2010 and 2025, with new workers boosting the economy’s talent pool, making the economy more attractive for investors in value added sectors such as software and financial services. As the country grows wealthier, its consuming middle class is estimated to increase more than 800% between 2010 and 2025, with these new consumers likely to yield significant opportunities for the agriculture, consumer durables and technology and communications sectors.
“For all of India’s potential, a number of significant reforms are required if the Indian economy is to take-off,” warns Maplecroft Associate Director Guy Bailey. “India’s place at the top of the pile is not assured unless it takes steps to resolve some considerable challenges. The elections in 2014 will be a crucial test, with the next government needing a mandate to invest in and upgrade infrastructure, improve the business environment and adopt transparency measures to combat corruption.”