United States: The growth opportunities are found in applications of Frontier Technologies (AI, Blockchain, Cloud Computing, 3D printing and MedTech). These technologies are now a maturity level where they can be applied at a reasonable price to economic and social problems. Trade disputes with China are having impacts on US supply chains. Given the potential downsides, cash remains king in this market. Companies that are exclusively focused on the US market are vulnerable to downturn. At the IBA, we work with US companies to go global and diversify.
EURO-Zone: The economies continue to flirt with recession, despite negative nominal and real interest rates. Germany is facing an election and a new coalition government could be difficult to form. As noted with the US, opportunities are there for applications of Frontier Technologies.
United Kingdom: The final shape of a Brexit deal with the EU casts a shadow of the economy. If the UK does not gain free access to the EU, there could be a major hit to the economy. On the other hand, the continued weakness of the Pound presents great opportunities for investors. One IBA participant is acquiring a company in the UK to expand its business and the UK authorities are actively supporting even small business investment in the UK.
Japan: The fundamental challenge of Japan remains its dwindling population, which declined by half a million in 2019. Japanese corporations continue to drive incremental productivity, but opportunities for non-Japanese companies to sell Frontier Technologies directly in Japan remain burdened by administrative barriers.
China: A 5.7% growth rate is still impressive by any measure, but it is down from the 6-8% levels of recent years. China has its own credit and real-estate bubbles and it is still difficult for non-Chinese SMEs to sell directly into China. In the 2020s, China is also hitting a demographic wall as the impacts of the one child policy hit the labor force.
India: With projections of growth anywhere from 6.2-7.0%, India has eclipsed China as the world’s fastest-growing major economy. There are many challenges with doing business in India (negotiating styles, logistics, corruption), but a number of IBA participants have found great opportunities in this fast-growing region. The high-percentage of English speakers is accelerating India’s entrance into the global economy.
South-east Asia: The countries of Vietnam, Philippines, Thailand, Indonesia and Malaysia are the beneficiaries of the disruption of supply chains caused by the Trump Administration tariffs on China. These countries have also been able to leap-frog development stages with the rapid introduction of mobile technologies.
Latin America: Economic development in this region is being slowed by domestic political issues. The major economies have not translated investments into tangible social progress. The newly signed US-Mexico-Canada (USMCA) trade agreement will likely have no measurable impact in 2020. Our IBA participants have found that online sales are a growing opportunity in those countries with which the US has a Free Trade Agreement (basically all the countries with a Pacific Ocean border).
Middle East – North Africa (MENA): Economic growth in this region continues to be closely aligned with oil prices. Crude oil is forecast to remain around current levels for 2020, allowing for moderate growth. Most of the countries in the region have policies to favor diversification of their economies away from oil and our IBA members have found opportunities selling products and services that support new markets.
Africa (Sub-Saharan): The continent has three major currents. South Africa continues to sort through political issues and dependency on mineral exports. It has thus only a 1% growth forecast. The oil exporting countries in central and west Africa have slightly higher economic growth potential, but the growth is bounded by sluggish oil prices. The highlight in the region remains east Africa. This region has capitalized on the rapid introduction of mobile phone technology to develop new products and business models. IBA companies have found many promising leads in the region for a variety of products – traditional to Frontier Technologies.