Appendix Grant Thornton IBR emerging markets index 2008

Foreword
Emerging markets offer exciting growth prospects even as the global economy as a whole faces a slowdown. For privately held businesses (PHBs), these prospects are difficult to ignore.
The InternationalMonetary Fund�s April 2008 World EconomicOutlook, forecasts that �emerging and developing economies� will on average grow by 6.3 per cent in 2008 and by 6.4 per cent in 2009. By contrast, �advanced economies� are forecast to grow by only 1.3 per cent in each of those years.
According to recent projections, China�s economy will move ahead of the US by 2027, India will catch up with the US by 2050 and the BRICs (Brazil, Russia, India and China) as a group will surpass the G7 by 2032.
According to theWorld Trade Organization, world merchandise trade in 2007
increased in value by 15 per cent to US$13.6 trillion, and emerging countries accounted for more than half of this growth. China is now the world�s
second biggest exporter (behind Germany) having overtaken the US.

Exploring the opportunities
A common factor in these emerging economies is that import requirements for machinery and equipment, in particular, are strong as they are needed to support industry growth. As these economies expand and households become
increasingly wealthy, consumer demand increases.
PHBs that can supply industrial equipment, consumer products and internationally tradable business and financial services will find these countries particularly attractive places with which to do business.
Foreign direct investment (FDI) is usually welcomed by rapidly growing countries as the benefits of closer integration into the global economy are appreciated.

Top emerging economies

Mexico has edged ahead of Brazil in terms of opportunities for investment and development, according to the International Business Report (IBR), produced by Grant Thornton International. The emerging markets index, produced using a weighted calculation of key indicators*, shows China, India and Russia still occupying the top three places followed by Mexico in fourth and Brazil in fifth.
Mexico's appearance in fourth place reflects its substantial international trade (combined exports and imports are second only to China) and its relatively high standard of living. Out of the top five emerging markets, Mexico's GDP per head comes out ahead of China, India and Brazil and is a close second to Russia.

Variables in the model
A country provides opportunities for trade and investment in proportion to its size, wealth and growth prospects. Risks (such as political instability, corruption, civil disturbance) are not included in this model.

size is measured by

PPP GDP[2] (weight 20 per cent)

population[3] (weight 10 per cent)

value of trade (both imports and exports)[4] (weight 10 per cent each)

wealth is measured by

PPP GDP per head (weight 15 per cent)

HDI[5] (weight 15 per cent)

Growth prospects are measured by

Forecast of annual average GDP growth 2008-14[6] (weight 20 per cent)

China 10,048 1,312 7,659 892 1,060 9 0.78
India 4,247 1,109 3,830 239 194 8 0.62
Russia 1,704 142 12,000 208 336 5 0.80
Mexico 1,201 104 11,548 291 267 3 0.83
Brazil 1,708 189 9,037 123 156 4 0.80
Poland 589 38 15,500 144 131 4 0.87
Indonesia 921 223 4,130 107 113 5 0.73
Thailand 604 65 9,292 161 155 5 0.78
Malaysia 301 27 11,148 154 182 6 0.81
Turkey 661 73 9,055 148 109 5 0.78
Hungary 196 10 19,600 89 88 4 0.87
Argentina 618 39 15,846 42 54 4 0.87
South Africa 566 47 12,043 91 70 5 0.67
Iran 592 69 8,580 60 80 5 0.76
Chile 208 16 13,000 46 66 5 0.87
Ukraine 356 47 7,574 52 40 6 0.79
Philippines 463 85 5,447 56 50 6 0.77
Vietnam 285 84 3,393 49 43 8 0.73
Venezuela 202 27 7,481 39 68 6 0.79
Colombia 363 46 7,891 31 26 5 0.79
Romania 217 22 9,864 59 35 4 0.81
Pakistan 405 159 2,547 38 19 7 0.55
Egypt 351 75 4,680 31 30 5 0.71
Algeria 245 33 7,424 27 57 5 0.73
Peru 187 28 6,679 19 26 6 0.77
Bangladesh 320 144 2,222 18 12 6 0.55
Nigeria 168 145 1,159 27 54 5 0.47
Mean 1,027 161 8,468 120 130 5 0.8

*goods and services
Source: Grant Thornton IBR 2008 14 Emerging markets
Appendix Grant Thornton IBR emerging markets index 2008
� Countries included
The World Bank classifies countries into four income
bands. The advanced economies and rich countries (e.g.
those with large oil-related incomes), are in the �highincome
economies� group. These 60 countries are excluded from the model.