CIVETS countries (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) are six favored emerging economies predicted to do well in future years. The term first appeared in late 2009, but grew in popularity in 2010. According to Investopedia:
The positive aspects of the CIVETS group of countries includes relative political stability (especially when compared to previous generations), young populations that focused on education and overall growing economic trends.
The CIVETS countries are not to be confused with the Civet cat (featured above). Nonetheless, a comparison has been made between the countries to the animal–a carnivorous mammal that eats and partially digests coffee cherries, passing a transformed coffee bean that fetches high prices.
These countries are the alleged next generation “tiger-countries.” Because of rapid development, there is potential for high growth in domestic consumption.
Like most people, I am familiar with the BRIC countries. I am also aware of the Next-11 list put together by Goldman Sachs in late 2005. However, I had not heard of the CIVETS countries, proposed by Robert Ward at the Economist Intelligence Unit, until last month while travelling in Vietnam. As I was staying in the town of Hue, I met a Scottish economist who informed me of the fairly new country bloc. “The BRIC and Next-11 countries are off the radar. The future economic landscape is all about the CIVETS,” he claimed. I was intrigued.
When observing both the CIVETS and Next-11, there are country overlaps: Indonesia, Egypt, Turkey and Vietnam. Thus four of the six countries in the CIVETS already appeared on the Next-11 list. And out of those four, two (Indonesia and Vietnam) are in SE Asia.
Looking at the remaining two, Egypt and Turkey, I am not too confident about their political stability– especially Egypt. Then again both the Next-11 and CIVETS were compiled before intense rioting took place against the Mubarak regime and the eventual downfall altogether. While Turkey shows greater promise, the economy did slow in 2012 (mainly due to the spillover effects from the Eurozone debt crisis). Moreover, Turkey now also faces issues corresponding to the Syrian civil war: namely, an abundance of war-torn refugees. Again, as with Egypt, both lists were published prior to Turkey’s 2012 economic downturn as well as the Syrian uprising.
Back to Indonesia and Vietnam, there is good reason why they appear on the Next-11 and CIVETS. Both nations are members of ASEAN, a geopolitical and economic organization of SE Asian countries predicted to have a much larger influence on the world stage in years to come. Think about President Obama’s November trip to the region where he made an appearance in Thailand, Burma and Cambodia. The Obama administration recognizes the importance of these countries and accordingly are making a “pivot to Asia.”
Consider Indonesia: the world’s fourth most populous country with half of the inhabitants below age 29. It is SE Asia’s largest economy. And when the global economic crisis hit, it weathered the effects fairly well. However, especially over the last year, prospects have not looked as they did in the past.
Indonesia witnessed its’ slowest growth in two years during the fourth quarter of 2012. Reuters reported that in 2012 Indonesia had its first annual trade deficit of $1.63 billion, after weak demand and prices resulted in exports falling 6.6 percent. And then, to make matters worse, came a recent rating cut by Standard & Poor on Indonesia’s debt, where it went from positive to stable. Nevertheless, public officials remain confident that the economy will continue to grow.
While GDP has been slowing a bit compared to the past (it is predicted to grow above 6% for 2013 and 2014) the growth is still impressive. (The US is predicted to grow around 2% for the corresponding years…)
Weighing in from a trade perspective, Indonesia has been a WTO member since 1995. And a very active member, joining many negotiation groups. In fact, Indonesia is the G-33 coordinator for the latest agricultural proposal submitted on public stock-holding for food security. Indonesia is clearly making strong efforts to “step up their game,” if you will., especially in the larger, international picture.
Not too far away geographically is Vietnam, one of the fastest-growing economies in the world for the past 20 years. Looking into the future, the country’s proximity to China may mean a future manufacturing hub. While modernization and growth is unquestionable, bear in mind that Vietnam is still a communist country. And there appears to be lots of gridlock within the government (no way, government’s can experience standstills??!) in terms of reform.
Looking at its’ international role in trade, Vietnam did only became a member of the WTO in 2007–investment and moving goods in the country is still very tedious. It has been said that cynics suggest Vietnam is included within the CIVETS to make the acronym work. Maybe there is not as much growth potential, after all.
So, are the CIVETS emerging countries just another meaningless prediction? Perhaps. But who knows what the next five, ten or even twenty years may hold. What is certain is that the decisions these nations are making today will affect their future on the global stage. Maybe even more telling of the future are the decisions of developed governments and businesses.
As for me, I may have to make a trip down to Jakarta.
Image Credit (1) – By Pearson Scott Foresman [Public domain], via Wikimedia Commons
Image Credit (2) – Photograph courtesy of friend Katie Ida Halper via Facebook