The top 10 emerging economies of 2014

The shine has gone off the BRICs recently. Where else is worth a punt? We pick the 10 economies you should be watching.

by Elizabeth Anderson, Emma Haslett, Rachel Savage
Last Updated: 18 Feb 2015

After a decade as City darlings - first the BRICs, now the MINTs - the shine has gone off the emerging markets recently. Currency woes and the start of the melancholy, long withdrawing roar as QE is unwound in the US have combined to send investors from Brazil to India, South Africa and even China into a bit of a tizzy.

Here at MT, we're made of sterner stuff.

We believe if there's one thing the past few years has taught us, it's that, in the age of the internet and easy global travel, the social and economic fundamentals of once-remote emerging countries will not be denied.

So for those of you with chutzpah and a risk profile that dangles well out over the adventurous edge of the precipice, here's our pick of both more and less well-known locations that might be worth a punt.

Punt level rating: 1=worst prospect; 10=best prospect.


Population - 91.73 million (2012 figure)
Literacy rate - 39%
GDP per capita - $470
Projected GDP growth for 2014 - 7.5%
Major corporate investors - British Airways, Diageo, EY,
GlaxoSmithKline, HSBC, Tullow Oil
Corruption Perceptions Index - 111th (out of 177)
Punt level - 6

The world's 12th (2012 figure) fastest-expanding economy and most populous landlocked nation has come a long way since the famine that inspired Bob Geldof and Bono to go into charity work. Now, after a sustained period of peace, it has the highest growth rate of any non-oil-producing country in Africa.

Despite this, agriculture is still the main employer in Ethiopia, accounting for 80% of jobs (and 90% of export revenue), although the sector's share of total GDP has dropped to 41.1%. Every year, the UK exports £142m of goods to the country, including power-generating machinery, transport equipment and scientific equipment.

The good news is that the government is keen to attract foreign investment, particularly when it comes to infrastructure, as exemplified by its ever-closer ties with China, which in January agreed to provide $25m to 'support small businesses'. The China Electric Power Equipment and Technology Company provided around $1.4bn for the massive - and massively controversial - Grand Renaissance Dam on the Blue Nile, which is expected to cost about $4.8bn in total. Trial services recently began on the rebuilt railway line from Djibouti to Dire Dawa.

So keen is the government for foreign investment that its own tenders account for about 40% of imports. The bad news is that those who do business in the country often complain the public sector is more of a hindrance than a help when it comes to doing deals (hence Ethiopia's ranking of 125 in the World Bank's Ease of Doing Business Index).

Nevertheless, along with Rwanda, Ethiopia is one of the few developing economies that has made strong commitments to sustainability: its prime minister, Hailemariam Desalegn, has signalled that the country should harness its natural resources - geothermal energy, solar and wind - rather than import expensive coal or oil. It means that, increasingly, the country is looking to foreign renewable energy companies for expertise, and it's willing to pay those of them that have it.


Population - 31.9 million
Literacy rate - 78%
GDP per capita - $6,455
Projected GDP growth for 2014 - 6.4%
Major corporate investors - General Electric
Corruption Perceptions Index- 171st
Punt level - 1

An unthinkable market just a few years ago, but some foreign firms are starting to dip their toes into one of the ultimate emerging markets. Iraq has the second-largest oil reserves in the world and, after three decades of conflict and sanctions, infrastructure improvements are needed everywhere. General Electric opened its first office in Iraq in 2011 and other multinationals are following.

However, stifling bureaucracy, battles between lawyers and politicians and the obvious security issues stunt Iraq's progress. Armoured cars and close protection are still the order of the day for foreign execs, and its young and desperately fragile democracy is enough to put off many would-be investors. The Arab Spring has proved how easily unpopular but apparently robust governments can be overthrown.

The World Bank ranks Iraq 151st out of 185 in its latest Ease of Doing Business Index. But there have been some improvements: it now takes 29 days to start a business, from 77 in 2012. The number of procedures required to get a construction permit has dropped from 13 to 10.

But the daily realities of doing business in Iraq are still grim. Last year, 7,818 civilians died in violent attacks, the most in five years. The country also suffers from a poor credit system, and scores badly on protecting investors, trade, enforcing contracts and resolving insolvency. Unless you are part of the US military-industrial complex, this is one market that is only for the extremely brave - and long-term - investor.


Population - 4.2 million
Literacy rate - 61%
GDP per capita - $414
Projected GDP growth for 2014- 5.4%
Major corporate investors- Ericsson, Firestone, Toyota
Corruption Perceptions Index- 83rd
Punt level - 3

Liberia was ravaged by a vicious civil war that raged for all but two years between 1989 and 2003. A decade on, the first African republic (founded by ex-American slaves) is still desperately poor - GDP per capita was just $414 (£252) in 2012. For the intrepid investor, that means lots of room to grow and gaps in the market for pretty much everything.

The west African nation is rich in natural resources, including iron, gold, rubber and timber. While international mining companies such as Arcelor Mittal and BHP Billiton are digging in up-country, oil majors such as Exxon Mobil and Chevron are exploring offshore and Ericsson is connecting the broadband dots.

However, Liberia's Nobel Peace Prize laureate president, Ellen Johnson Sirleaf, is struggling to rebuild the country quickly amid accusations of nepotism (her son Robert stepped down as chairman of the national oil company in September after 18 months). Questions have been raised over the legitimacy of forestry and palm oil concessions, including how Liberia is going to feed itself without any land left for farming.

Many of the country's roads are impassable in the rainy season. Power is patchy and expensive. However, unlike much of the rest of sub-Saharan Africa, there are a couple of railway lines. Only one has re-opened since the war.

Growth is stalling too: a GDP rise of just 5.4% is forecast this year, after it jumped as high as 8.9% in 2012. However, with projects such as the $200m reconstruction of a derelict hydropower plant (being co-funded by Germany, Norway and the European Investment Bank) under way, Liberia's future could yet be bright.


Population - 557,000
Literacy rate - 96%
GDP per capita - $78,275
Projected GDP growth for 2014- 13.5%
Major corporate investors - Galaxy Entertainment, Wynn Resorts
Corruption Perceptions Index- 46/183 (2011 figure)
Punt level - 9

Macau's huge gambling sector dominates its economy and puts Las Vegas to shame. Gambling revenue in the territory rose 19% last year to 360.7bn patacas (£27.5bn) - seven times more than earnings in Vegas. A Special Administrative Region, Macau is the only place in China where casino gambling is legal and it attracts many visitors from the mainland and beyond. Around 28 million people visit each year - not bad for a place with a population of just over half a million.

Like Hong Kong, Macau also benefits from being a free port. This means that raw materials and capital goods do not attract import taxes, which, alongside low taxes, makes it a highly attractive place for foreign investors. All of which helps it to the fifth highest per capita GDP in the world, more than double the UK's $39,093.

The territory has healthy industry and agricultural sectors, but tourism and gambling are by far Macau's main economic drivers - gaming alone contributes 50% of Macau's GDP and 80% of local government revenues. There are currently 35 casinos crammed into roughly 30 square kilometres, and there are plans for many more as investors bet that the gambling boom will continue throughout the decade.

However, there are concerns that Macau is running out of steam: it faces challenges in managing its ballooning casino industry, tackling money-laundering and the need to diversify the economy away from heavy dependence on gaming revenues.


Population - 2.8 million
Literacy rate - 97%
GDP per capita - $3,673
Projected GDP growth for 2014- 11.7%
Major corporate investors- Peabody Energy, Rio Tinto
Corruption Perceptions Index- 83rd
Punt level - 8

There's more to Mongolia these days than yaks' milk and yurts. While much of the world is grappling with flat growth, the country - sandwiched between Russia to the north and China to the south - is predicted to be the fastest growing economy in the world over the next two decades.

The IMF expects growth to average 14% a year between 2012 and 2016. The economy grew by 11.5% in the third quarter of 2013.

If that sounds tempting, Mongolia also has the world's largest copper reserves, significant onshore oil and gas fields, vast gold and iron ore deposits, as well as an abundance of other metals. Some 88% of its exports are minerals, which are in heavy demand from neighbouring China. It has a young, well-educated population and a relatively vibrant democracy with a pro-western outlook - English is Mongolia's official second language.

Flashy office high-rises, modern apartment buildings and luxury stores are now common sights in Ulaanbaatar, Mongolia's capital city, as the country enjoys the spoils of flogging its natural resources to the highest bidder.

The country is ranked a fairly respectable 76th in the World Bank's latest Ease of Doing Business report. While it is relatively easy to start a business there, the country scores low when it comes to trading across borders (not helped by the fact that it is landlocked, making sea transport difficult) and it suffers from sclerotic bureaucracy. But, all the same, its abundant natural resources makes Mongolia a relatively sure-fire bet among our list.


Population - 11.5 million
Literacy rate - 71%
GDP per capita - $620
Projected GDP growth for 2014 - 7.5%
Major corporate investors- China Civil Engineering Construction
Corporation, Marriott, Visa
Corruption Perceptions Index - 49th
Punt level - 4

It's 20 years since genocide devastated Rwanda, causing the deaths of as many as one million Tutsis and moderate Hutus. Paul Kagame and his Rwandan Patriotic Front, the rebel force credited with leading the country to independence, which is now a political party, has been in charge since 2000 - and while questions remain over human rights (in January he was accused of assassinating a former spy chief), it's hard to argue with his economic track record.

From the economic equivalent of a nuclear winter in the aftermath of the genocide, the country is now the World Bank's ninth fastest-expanding country, with a 7.5% rate of growth predicted for this year. In 2012, GDP per capita rose to $619.93, up from $131.56 in 1994. Although the country took $944.47m of aid in 2012, according to the OECD, one the main aims of Kagame's administration is to wean the country off aid for good.

Rwanda is also 32nd in the World Bank's Ease of Doing Business ranking, up from 54th the previous year. And entrepreneurs take note: when it comes to starting a business, it's ninth - anyone can incorporate a business in under 24 hours.

Subsistence farming makes up 80% of the economy, with mining increasingly important. In 2000, Kagame launched Vision 2020, which outlined plans to transform the country into a knowledge economy.

UK firms are rare but that's changing, as the country wants foreign investment. Be sure that foreign firms will start sniffing around soon.


Population - 3.8 million
Literacy rate - 94%
GDP per capita - $9,534
Projected GDP growth for 2014 - 6.9%
Major corporate investors- Coca-Cola, ExxonMobil, HSBC, Samsung
Corruption Perceptions Index- 102nd
Punt level - 5

With a presidential ballot due in May, the narrow ribbon of land that joins the US and South America is in the grip of election fever. It's a testament to Panama's relatively young democracy that there's feverish speculation over the outcome: conservative incumbent President Martinelli has a fight on his hands if he's to trump a centre-right alliance led by Juan Carlos Varela.

After years of sluggish growth in the early 1990s (caused, in part, by the small matter of an invasion by the US), the Panamanian economy has bounced back. In 2012, it grew by 10.5%, making it the fastest-growing economy in the Americas - some have even named it Central America's answer to Singapore.

The government is keen to attract foreign investment with lowish corporate tax rates, but it is embroiled in a dispute with the Spanish and Italian companies it engaged to work on the $3.2bn expansion of the Panama Canal.

So far, the project has racked up cost overruns of $1.6bn. The companies building the project say the government should pick up the tab and that it took advantage of them during the recession by agreeing far too low a price for the project. The government says that's their problem.

The canal, though, remains one of the biggest sources of income for the isthmus - as is the rather medical-sounding Colon Free Trade Zone, located at the entrance to the canal, which registers $5bn of imports and exports annually.

What's particularly attractive to investors is the currency: Panama uses the US dollar.


Population - 7.3 million
Literacy rate - 98%
GDP per capita - $5,190
Projected GDP growth for 2014 - 2.0%
Major corporate investors- Ball Packaging, Fiat, Michelin, Telenor
Corruption Perceptions Index- 72nd
Punt level - 7

Still reeling from the bloody Balkan conflicts of the 1990s, Serbia is nevertheless looking to the future and has put together a lucrative package to entice foreign investors. Companies that set up shop in the country will get a 10-year corporate tax break, providing they invest at least £7.6m and employ 100 workers. Once they do have to pay tax, the 15% corporate rate is one of the lowest in Europe.

One benefit of doing business in Serbia is access to a highly skilled, low-cost workforce - education levels are high and English is widely spoken. PricewaterhouseCoopers ranked Serbia the third-most attractive manufacturing and seventh-most attractive foreign direct- investment destination among emerging economies.

The system is weighed down by bureaucracy and stifling planning laws, but the government is addressing this. Microsoft, Telenor, Fiat and Siemens all have a base in Belgrade, the capital. Zurich's Ball Packaging, which makes cans for the likes of Heineken, Coca-Cola and Pepsi, has invested 100m into its operations since coming to Belgrade in 2004.

Serbia benefits from being in south-east Europe, as it's pretty convenient for most investors, and it has easy access to the EU and Russia, both of which it has free trade agreements with. Serbia hopes to join the EU by 2020, which would open up a raft of commercial opportunities. So if you're feeling frisky, now could be the perfect time for a punt.


Projected GDP growth for 2014 - 1.8 million
Literacy rate - 58.6%
GDP per capita - $1,068
Projected GDP growth for 2014 - 8%
Major corporate investors- ConocoPhillips, Starbucks
Corruption Perceptions Index- 119th
Punt level - 4

The south-east Asian country (also known as East Timor) has hovered under the radar since becoming independent from Indonesia in 2002. With a population of just 1.2 million people, 37% of whom live below the poverty line, it is one of the smallest and poorest countries in Asia. Yet there are fruits to be had for patient investors. The country sits on substantial oil reserves in the Timor Sea (which are jointly exploited with Australia) and its vast offshore oil and gas fields have led to a capital fund worth around $11.7bn. The economy is growing at roughly 10% a year.

Timor-Leste remains primarily an agricultural economy, and coffee production is a critical industry, accounting for 90% of non-oil exports and directly employing a quarter of the population. Most of the coffee grown is sold to Starbucks.

The country suffers from poor road networks but steps have been taken to improve this - government spending has increased significantly since 2009, primarily on basic infrastructure, including electricity and roads. Officials have also introduced incentives for foreign investors in the mining, forestry, agriculture and food-processing industries.

Timor-Leste was ranked 172 by the World Bank for ease of doing business, as creaking bureaucracy means it takes more than 90 days to incorporate a company. Widespread corruption unchecked by a weak judicial system has also weighed on economic activity and is proving one of the biggest discouragements to foreign investment.


Population - 10.8 million
Literacy rate - 79%
GDP per capita - $4,237
Projected GDP growth for 2014 - 2.5%
Major corporate investors - Airbus, BG Group, Unilever
Corruption Perceptions Index - 77th
Punt level - 2

Tunisia, where the now-wintery Arab Spring was sparked by a street vendor setting himself on fire in protest at government harassment, has become increasingly open for business since grizzled dictator Zine el-Abidine Ben Ali was ousted by street protests in January 2011. The north African nation is at 51 this year in the World Bank's Ease of Doing business rankings, up from 69th in 2010.

The end of the 23-year-old regime has much to do with the liberalisation. 'Seemingly half the Tunisian business community can claim a Ben Ali connection through marriage,' the US ambassador to Tunisia said back in 2008.

General Motors, Airbus and Unilever have factories, and the clothing sector, which accounts for almost half of manufacturing jobs, supplies brands from Adidas to Hugo Boss. BG Group produces over 60% of Tunisia's gas, but the country is a petro-minnow compared with its vast desert neighbours, Algeria and Libya.

However, while Islamists and secular politicians have come together to pass a new liberal constitution, the problems that started Tunisia's revolution simmer away. Youth unemployment is a stubbornly high 30% and businesses complain of a huge skills gap, despite record numbers of Tunisians going to university. Tunisia used to be a French colony, so British businesses might want to brush up on their language skills before heading to the Maghreb.


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