The report below was first published by BMI Research (a unit of Fitch Group)
We predict that six economies will grow to exceed USD1 trillion in nominal GDP over the coming ten years: Argentina, Indonesia, Nigeria, Saudi Arabia, Taiwan and Turkey. They will join a number of emerging markets that have already achieved trillion-dollar-economy status : China, India, Brazil and Mexico. As shown in the chart, the pace of expansion in the newcomers will vary greatly, underscoring our ‘reformers to outperform’ global theme.
Indonesia and Argentina are poised for swift economic growth and are closest to becoming trillion dollar economies, in our view. Indonesia is poised to cross the trillion-dollar threshold in 2018 , thanks to its large domestic market and natural resource wealth, as well as ongoing (albeit slow-paced) structural reform efforts . Argentina is currently a long way from being a trillion dollar economy (see table below), but will leapfrog several others to achieve that status by 2019 , according to our forecasts . Following the broad-based liberalisation of the economy under President Mauricio Macri, investment is strong and will increasingly trans late into new productive activity, particularly in energy, infrastructure and real estate (see ‘What A Difference A Year Makes’, December 8, 2016).
Turkey and Saudi Arabia are next in line to become trillion dollar economies , but they will not achieve this until 2023 in our view, barring radical changes in policy. The Turkish economy looks set to suffer from weak investment amid rising authoritarianism and a widening budget deficit (see ‘Precarious Fundamentals No Matter Referendum Outcome’, March 29). Saudi Arabian growth will likely be curtailed by fiscal austerity and the underdevelopment of the nonoil sector.
Meanwhile, we anticipate that Taiwan and Nigeria will take ten years to become trillion dollar economies . In Taiwan’s case, a number of structural factors are set to weigh on growth: an uncompetitive technology sector, a rigid labour market, deteriorating demographics and the slowdown in China (a key trade partner). Nigeria will suffer from a dearth of domestic capacity and critical reforms to the power, infrastructure and oil and gas sectors will be slow in coming.