Goldman Sachs: Time to rethink emerging markets

Goldman Sachs has identified four countries that will drive global growth over the coming decade alongside the so-called Bric nations of Brazil, Russia, India and China.

The bank, which gave the investment world the concept of Bric ten years, says Mexico, South Korea, Turkey and Indonesia will be among the fastest growing countries of the next decade.

Katie Koch, from the office of the chairman at Goldman Sachs Asset Management, told the Morningstar Investment Conference 2012 that to label these eight nations as emerging markets is “quite insulting”.

“These are big, substantial and important countries,” Koch says. She points out these nations are home to 30% of the world’s billionaires, 20% of its Fortune 500 companies and 14 of the 20 largest cities.

According to Goldman Sachs, these eight markets will be the top contributors to global growth over the next ten years. The smallest contributor of these eight – Turkey – is expected to contribute the same amount to global growth as the UK over this period.

Koch notes that the rise of the consumer in growth markets will be driving force behind their continued expansion and predicts they will add another two billion people to the world’s middle classes in the next decade.

However, she claims that direct investment in these countries is essential if their potential to be maximised, as many of the word’s leading companies of the future are likely to come from these areas. The commentator also suggests valuations in these growth markets are currently attractive.

Koch says Bangladesh, Egypt, Iran, Nigeria, Pakistan, the Philippines and Vietnam are seven countries with the most potential of becoming growth markets in the coming years.