The CIVETS are outshining BRICS as
engines of future international economic growth.
Move over BRICs, it’s the CIVETS’ time to roar.
The so-called “BRIC” countries—Brazil,
Russia, India and China—have been the economic
powerhouses of emerging markets. Over the last decade, business
investors swarmed to these countries hoping to tap into an
economic growth spurt. BRICs aren’t done. They still have
enormous middle-class populations with money to spend, and
frankly, growth rates look better than in the Western markets.
China is expected to grow 7%–8% in 2012, off its
double-digit returns in prior years but far above the forecast
of 1.8% for the G-7 nations.
But for those willing to take big risks, for big returns,
the new buzz is “CIVETS.” With growth slowing in
the BRICs, investors are eyeing the next tier of emerging
tigers, err “civets.” Not to be confused with furry
creatures from Asia, CIVETS is an acronym coined by Robert Ward
with the Economist Intelligence Unit (EIU). It stands for
Colombia, Indonesia, Vietnam, Egypt, Turkey and South
Michael Geoghegan, CEO of HSBC, Europe’s largest bank,
says the CIVETS have a bright future because “each has a
large, young, growing population, each has a diverse and
dynamic economy and, in relative terms, is politically
These young upstarts offer tremendous potential, soaring
domestic consumption and a population with an average age of
27. In 2011, the combined GDP of the CIVETS was $13.4 trillion.
Geoghegan says the middle class in these countries will grow to
1.2 billion people by 2030, up from 250 million in 2000. With
more money to spend, households will buy more products, which
“bodes well for financial services.”
No opportunity is without risk, so caveat emptor.
Here’s what EIU and the World Bank are saying.
Colombia’s projected 2012 GDP is 4.9%. Its population
of nearly 45 million has a median age of 28. Leading industries
are oil, coal, coffee, agricultural products and emeralds.
Colombia’s pro-business government recently implemented
reforms, including improving security, which is the number one
risk, making it easier to do business in the country. A $55
billion, 10-year investment plan to rebuild its crumbling
infrastructure will help boost the economy. Colombia recently
signed a free-trade agreement with the United States and other
developed countries, which should help its growth. In addition
to security, taxes are complex, and corruption and inefficiency
Indonesia has the fourth-largest population in the world and
a growing middle class, which is expected to triple by 2014. It
also has a large pool of educated talent and the lowest unit
labor cost in the Asia-Pacific region. Its 2012 GDP growth is
expected to be 5.9%. Foreign direct investment jumped 30% in
the first quarter to a record $5.6 billion and is expected to
hit $20 billion in 2013. Industry makes up half its economy.
Problems include a lack of basic infrastructure, government
inefficiency and protectionist regulation.
Vietnam is politically stable with lower labor costs than
China, making it an attractive manufacturing center. Its GDP is
expected to be 5.7% in 2012 and 7% in 2013. The median age is
27. The middle class has substantial purchasing power, which is
good for business. The business environment has improved, and
the government provides tax breaks for high-tech, education and
healthcare. Analyst concerns are inflation, an overstimulated
pace of growth, and vulnerability of the banking system.
Egypt’s GDP is 1.6% for 2012 and projected at 5.2% for
2013. The median age is 24. With the Suez Canal joining
Egypt’s fast-growing ports on the Mediterranean and Red
Sea, the country is poised to become a major trading hub
between Europe and Africa. It has a young population willing to
spend on consumer goods. Instability remains a concern, but
unrest is expected to die down.
Turkey’s 2012 GDP is 3.5%. The median age is 28.5.
Turkey’s access to Europe and the Middle East and its
stable government make it attractive for business. It has a
young, educated, upper middle-class population that can afford
to buy consumer goods, technology and energy. It has grown
rapidly, but there is some concern whether it can continue that
trajectory. The government is not as effective as it could be,
and the legal process is slow and unpredictable.
South Africa’s projected GDP is 2.3% in 2012 and 3.7%
in 2013. EIU says the country has a fairly good physical
infrastructure, sound macroeconomic policy, developed legal and
tax systems and a strong civil society. It’s rich in
natural resources, e.g., gold. Businesses are looking to South
Africa to test the latest products on a “young and hip
The government plans to spend $39 billion to improve
infrastructure, boost investment and create jobs. Growth is
slower than other CIVETS, and exports have suffered from the
economic slowdown in the United States and Europe. Rigid labor
markets, high unemployment (23.9%) and high crime levels hinder
Kemper is The Council’s vice president of Industry