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Emerging Markets in Southeast Asia: Trends that Will Impact Future Growth

Over the past few decades, many nations in Southeast Asia have been listed amongst the world’s fastest growing emerging markets. However, can this pace carry forward into the future and will the economies these markets are based on continue to thrive? These are questions many global economists are attempting to answer by forecasting high impact trends within given economies.

Photo by Marlo Van Poppel

Before analysing trends within these markets, it is important to look at the bottom line. What exactly is an emerging market and at what point can it be said that a particular market is now amongst the elite, a bona fide developed market? Oddly, if one was to go by the traditional definition, most ‘developed nations’ would not meet the requirements to be listed as developed.

Brief Understanding of What Constitutes an Emerging Market

An emerging market is simply seen as one that has characteristics of other markets that are developed, but has an economy where the majority of the people are on the lower earnings scale per capita. Does this not sound like the United States and the UK since the economy bottomed out in 2008 and 2009? However, neither of these economies is said to once again be emerging.

Emerging markets will be classified as developed once the majority of people are within the mid to upper wage earners within their respective market/economy. Of course this is just a brief understanding of what it takes to make it to the ranks of the ‘developed markets’ but it gives enough background to begin forecasting trends that can make or break an economy.

Sustainability: Keeping Pollution in Check

In today’s global market, there is a huge emphasis on reducing a country’s carbon footprint. If an emerging market is not paying heed to the ecological damage being brought about by the rapid growth of industrialisation within their borders, there is every possibility that market may be boycotted.

One example of this is the general attitude towards Singapore and its seemingly never-ending haze. Many countries in the region, as well as around the world, are placing a great amount of pressure on them to find alternative energy sources to reduce the damage they are wreaking on the ecology. Since there is a major thrust towards developing Singapore as a major hub for business in Southeast Asia, their response to this issue could have a major impact.

Follow the strides which Singapore is making towards becoming a Southeast Asia business hub at http://www.servcorp.com.sg/en/news-articles/business-articles/the-development-of-singapore-as-a-business-hub-for-southeast-asia/.

Rapid Consumption of Resources

As markets being to emerge, productivity is proportionately responsible for a rapid increase in that nation’s GDP. Unfortunately, altogether too many of these nations are blinded by the rapidity of their growth and are not planning for the future. Yes, there may be enough resources to meet present needs and maybe for a short time into the future, but not enough to sustain production at these levels over a long period of time. This trend will have a significant impact on a market’s economic health in future years.

Inadvertent Marginalisation

And here we have come to the crux of the matter. A developed market is one in which the majority of people are mid to higher earners as opposed to one in which the rich get richer and the poor get poorer. Many emerging markets inadvertently create such a climate wherein greater numbers of people are becoming marginalised as the wealthy continue to get wealthier.

Forecasting a market’s economic health must take into account trends in sustainability, consumption and marginalisation. If these can be overcome, and an effort is being made to do so, there is every possibility that nation will continue its journey to the land of ‘the developed.’ It will be interesting to follow the Southeast Asia market to see how individual countries are boding on their journey towards a sound global economy.