While the United States has enjoyed economic growth above 3.0% for two quarters, much of the rest of the world (and, indeed, the developing world) may soon experience stormier conditions. The World Bank recently released its Global Economic Prospects report highlighting both global and regional economic trends, with many revised down from previous projections.
The World Bank has revised global growth down to 2.9% in 2019, and down to 2.8% the following two years. However, some regions are still projected to see modest growth, while many will see their economic growth stall, or ease below previous projections. For businesses that are considering or planning a global expansion in the coming year, these economic projections may influence where that expansion leads.
East Asia and the Pacific: Global Expansion Hotspots
For many years, East Asia has experienced rapid, sustained economic growth; it remains one of the developing world’s fastest-growing regions. While the region is projected to experience a slight moderation down to 6%, its growth is largely reliant commodity prices remaining stable—this amid more restrictive global financial conditions.
China, the region’s economic powerhouse (and world’s second-largest economy) will also see steadying economic conditions, down to 6.2% in 2019. The results of recent loosening of both fiscal and monetary policies is expected counterbalance the negatives impact of higher tariffs on its exports.
Europe and Central Asia: Downturns Coming
Between Brexit, rising nationalism, and unrest in Turkey (among other challenges) Europe and Central Asia are undergoing some very trying times—both socially and economically. However, when Turkey is removed from the equation, the region remained at 2.9% growth throughout 2018 with Eastern and Central Europe experiencing some of the region’s most resilient growth. But 2019 may prove to be a year of easing throughout the region; the Euro Area is projected to steadily slow, and the region will likely see its growth dip to 2.3% by the end of the year.
Oil-exporting countries saw continued growth throughout 2018—largely due to rising oil prices. Russia, who exports ~11% of the world’s crude oil, saw its economy grow at 1.6% not solely to due to oil exports, but increased activity within its borders. But for 2019, Russia is projected to dip slightly to 1.5% throughout the year.
Economic Expansion in South Asia: Leading the Rest
South Asia is home to some of the world’s most politically unstable countries—but with an estimated 2018 growth rate at 6.9%, it lays claim to the world’s economically fastest-growing region. Private consumption and upticks in investment across each of the South Asian countries were integral to the region’s sustained growth throughout 2018—but it was India’s 7.3% growth rate that elevated much of the region’s growth.
This growth is expected to carry over into 2019, with a robust 7.1% growth rate expected across the region. And, despite sluggish international trade, the region will remain largely unaffected due to its already-low exposure to that trade. Even relatively isolated Bhutan is projected to experience a 7.6% growth rate in 2018-19—up a full 3 percentage points from just one year prior.
Rely on Expert Expansion Guidance—No Matter the Region into Which You Expand
Global expansion can be full of risks. But working with an experienced partner who can help mitigate those risks is invaluable—especially when expanding into politically and economically volatile countries. If you’re considering expanding into one of these regions, but aren’t ready to commit to a long-term presence, Velocity Global’s International PEO (Professional Employer Organization) solution can have you operating in your new market in as few as 48 hours—and out if and when you need it. Ready to get started? Let’s talk.