Navigating the global economy

Showing signs of recovery, the global economy is projected to double in size by 2032 and nearly double again by 2050. China will outstrip the US by 2017 (measured in terms of purchasing power parity). And India is likely to become the third ‘global economic giant’, a long way ahead of Brazil, which we expect to move up to fourth place, ahead of Japan.

As the emerging economies become bigger and wealthier, demand for services is rising. This phenomenon is already shaping global markets: in 2010, emerging economies spent more than the G7 on imported services for the first time since reliable records began.

What this means for your business

These long-term growth trends present many opportunities and challenges. China, India, Brazil and other emerging economies will become large consumer markets, not just low-cost production centres. And, with annual growth projected to be only 2% in the advanced economies, companies will need to look increasingly to other markets.

The booming trade in services is one area that looks particularly promising. Natural resource constraints, such as those relating to energy use and climate change, will also boost demand for new, greener technologies.

But the emerging markets can be difficult places in which to do business. The ability to understand and adapt to local rules and customs will be essential, as will the right entry strategy and, where appropriate, the right partners. Good relations with local government and regulatory bodies will also be crucial. And, in some cases, the best production centres may not be the largest consumer markets.