CIVETS
Encyclopedia
The CIVETS is an acronym for favored emerging markets
coined in late 2009 by Robert Ward, Global Forecasting Director for the Economist Intelligence Unit
(EIU). The term has also been used by HSBC
's chief executive Michael Geoghegan
. These countries are favored for several reasons, such as a dynamic and diverse economy and a young growing population. This list can be compared with the Next Eleven
devised by Jim O'Neill
and Goldman Sachs
- having a few differences, but many similarities - as well as the G20 developing nations
.
, and was made widely public by Michael Geoghegan
, President of the Anglo-Chinese HSBC
in a speech he gave to the Hong Kong Chamber of Commerce in April 2010. Geoghegan compared these countries to the civet
, a carnivorous mammal that eats and processes coffee cherries to then dispose them in a transformed coffee bean that is considered very valuable and sells at high market prices.
Michael Geoghegan calls these countries “the new BRICS” because of the potential that they have as second generation emerging economies . He says that “emerging markets will grow three times as fast as developed countries this year [2010]”. To this, he adds the fact that the center of gravity of the world is moving towards the East and the South (Asia and Latin America).
Apart from CIVETS as attractive markets, recent analysis is also addressing their role in the global governance, especially at the G20, where Indonesia, South Africa and Turkey are members. In the development agenda, CIVETS are already perceived as "development providers investing in peer-to-peer learning and horizontal partnerships and (...) are bound to become strategic players at the G20, UN and IFI levels".
In this line, during the 2011 Annual Meetings of the International Monetary Fund and the World Bank, the Ministers of Economy and Finance of CIVETS countries established a formal mechanism for communication and coordination.
All of these countries are also 'Next Eleven
' countries, except Colombia and South Africa.
data as at December 28, 2010:
is very special. Colombia
has had seemingly never ending war with terrorist groups that tamper with the country's stability.
There are policies that favor the creation of businesses and foreigners can integrate to this market without any major hurdle. As rightist candidate Juan Manuel Santos takes office it is assured that the country will continue the policies that begun with Álvaro Uribe
.
Foreign investment has increased in 250% and an oil boom, the country is planning on how to avoid the Dutch disease
as billions of dollars enter the country.
The country has a budget deficit of 3.6% which is reasonable according to The Economist. Inflation rate is 2.6% and external debt a modest 47% of GDP. As foreign money floods the country, infrastructure is currently improving dramatically in the Latin American country.
"Overall, I think the hands-down best and most timely CIVETS play right now is Indonesia.
After emerging as the third-fastest-growing member of the G20 in 2009, Indonesia has been a strong performer. Last year Indonesia expanded at an impressive rate of 4.4% — especially considering the economic landscape.
Like China and India, Indonesia is also expanding rapidly, and investment growth in 2009 was boosted by infrastructure spending and high commodity prices.
With 243 million people and a GDP of $521 billion, it's a substantive enough economy to invest in. The budget deficit is a reasonable 2.1% of GDP, and the current account is in surplus.
as one of ASEAN nation may cease to be a low income economy as GDP per Capita reaches an estimated $1,200 in 2010 (or the worst case in 2011).
, as of September 2011, is predicting growth of just 1% this year, compared with 5.2% last year — but analysts expect it to regain its growth trajectory when political stability returns. Egypt has many assets including fast-growing ports on the Mediterranean and Red Sea
linked by the Suez Canal
, a growing tourism network, and vast untapped natural-gas resources. Egypt's 82 million population has a median age of 25.
(1999). Since December 31, 1995, Turkey has been a part of the EU Customs Union. Mean wages were $8.71 per manhour in 2009. Turkey grew at an average rate of 7.5 percent between 2002 and 2006, faster than any other OECD countries. Istanbul
, Turkey's financial capital
, is fourth in the world behind Tokyo
, New York
and London
. Turkey's major cities and its Aegean
coastline attract millions of visitors every year.
The CIA classifies Turkey as a developed country
. Turkey is often classified as a newly industrialized country by economists and political scientists.
Emerging markets
Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. Based on data from 2006, there are around 28 emerging markets in the world . The economies of China and India are considered to be the largest...
coined in late 2009 by Robert Ward, Global Forecasting Director for the Economist Intelligence Unit
Economist Intelligence Unit
The Economist Intelligence Unit is part of the Economist Group.It is a research and advisory company providing country, industry and management analysis worldwide and incorporates the former Business International Corporation, a U.S. company acquired by the parent organization in 1986...
(EIU). The term has also been used by HSBC
HSBC
HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine...
's chief executive Michael Geoghegan
Michael Geoghegan
Michael Geoghegan CBE is an English businessman, who served as HSBC Group's chief executive from 26 March 2006 to 2010. He joined HSBC in 1973 and has previously led the group's South American and European operations.-Early life:...
. These countries are favored for several reasons, such as a dynamic and diverse economy and a young growing population. This list can be compared with the Next Eleven
Next Eleven
The Next Eleven are eleven countries—Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam — identified by Goldman Sachs investment bank and Jim O'Neill as having a high potential of becoming, along with the BRICS, the world's largest...
devised by Jim O'Neill
Jim O'Neill (economist)
Jim O'Neill is presently the Chairman of Goldman Sachs Asset Management. He was previously head of global economic research and commodities and strategy research at Goldman Sachs. He is best known for his prominent economic thesis regarding the economically related nations referred to as BRICs...
and Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
- having a few differences, but many similarities - as well as the G20 developing nations
G20 developing nations
The G20 is a bloc of developing nations established on 20 August 2003. Distinct and separate from the G-20 major economies, the group emerged at the 5th Ministerial WTO conference, held in Cancún, Mexico, from 10 September to 14 September 2003...
.
Origins of the term
The acronym was coined by Robert Ward, Global Director of the Global Forecasting Team for the Economist Intelligence UnitEconomist Intelligence Unit
The Economist Intelligence Unit is part of the Economist Group.It is a research and advisory company providing country, industry and management analysis worldwide and incorporates the former Business International Corporation, a U.S. company acquired by the parent organization in 1986...
, and was made widely public by Michael Geoghegan
Michael Geoghegan
Michael Geoghegan CBE is an English businessman, who served as HSBC Group's chief executive from 26 March 2006 to 2010. He joined HSBC in 1973 and has previously led the group's South American and European operations.-Early life:...
, President of the Anglo-Chinese HSBC
HSBC
HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine...
in a speech he gave to the Hong Kong Chamber of Commerce in April 2010. Geoghegan compared these countries to the civet
Civet
The family Viverridae is made up of around 30 species of medium-sized mammal, including all of the genets, the binturong, most of the civets, and the two African linsangs....
, a carnivorous mammal that eats and processes coffee cherries to then dispose them in a transformed coffee bean that is considered very valuable and sells at high market prices.
What does being part of this group imply
The economies that are part of this group are considered to be very promising because they have reasonably sophisticated financial systems, controlled inflation, and a soaring young population.Michael Geoghegan calls these countries “the new BRICS” because of the potential that they have as second generation emerging economies . He says that “emerging markets will grow three times as fast as developed countries this year [2010]”. To this, he adds the fact that the center of gravity of the world is moving towards the East and the South (Asia and Latin America).
Apart from CIVETS as attractive markets, recent analysis is also addressing their role in the global governance, especially at the G20, where Indonesia, South Africa and Turkey are members. In the development agenda, CIVETS are already perceived as "development providers investing in peer-to-peer learning and horizontal partnerships and (...) are bound to become strategic players at the G20, UN and IFI levels".
In this line, during the 2011 Annual Meetings of the International Monetary Fund and the World Bank, the Ministers of Economy and Finance of CIVETS countries established a formal mechanism for communication and coordination.
All of these countries are also 'Next Eleven
Next Eleven
The Next Eleven are eleven countries—Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam — identified by Goldman Sachs investment bank and Jim O'Neill as having a high potential of becoming, along with the BRICS, the world's largest...
' countries, except Colombia and South Africa.
Commonalities
All of these countries share the fact that they have a great variety of exports, their economies are mostly made up of primary products and natural resources, they have geostrategic locations, in the past five years foreign direct investment has considerably increased, and some say that in the next twenty years they may be above G-7 countries. According to The Economist’s Intelligence Unit, CIVETS will have healthy yearly growth rates of 4.9% for the next twenty years, while G-7 countries are predicted to have only 1.8% yearly growth rates.Exchange Traded Fund (ETF)
ETFExchange-traded fund
An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE...
data as at December 28, 2010:
- Colombia: GXG, up 49.07%,
- Indonesia: IDX, up 40.04%,
- Vietnam: VNM, up 1.52%,
- Egypt: EGPT, up 4.85% in 13 weeks, because of new fund,
- Turkey: TUR, up 26.63%,
- South Africa: EZA, up 31.80%
Challenges
All of these countries also share similar challenges: unemployment, corruption, and inequality are persistent problems in most of the countries of the group.Colombia
The context in ColombiaColombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
is very special. Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
has had seemingly never ending war with terrorist groups that tamper with the country's stability.
There are policies that favor the creation of businesses and foreigners can integrate to this market without any major hurdle. As rightist candidate Juan Manuel Santos takes office it is assured that the country will continue the policies that begun with Álvaro Uribe
Álvaro Uribe
Alvaro Uribe Vélez was the 58th President of Colombia, from 2002 to 2010. In August 2010 he was appointed Vice-chairman of the UN panel investigating the Gaza flotilla raid....
.
Foreign investment has increased in 250% and an oil boom, the country is planning on how to avoid the Dutch disease
Dutch disease
In economics, the Dutch disease is a concept that purportedly explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector...
as billions of dollars enter the country.
The country has a budget deficit of 3.6% which is reasonable according to The Economist. Inflation rate is 2.6% and external debt a modest 47% of GDP. As foreign money floods the country, infrastructure is currently improving dramatically in the Latin American country.
Indonesia
As Robert Hsu states it:"Overall, I think the hands-down best and most timely CIVETS play right now is Indonesia.
After emerging as the third-fastest-growing member of the G20 in 2009, Indonesia has been a strong performer. Last year Indonesia expanded at an impressive rate of 4.4% — especially considering the economic landscape.
Like China and India, Indonesia is also expanding rapidly, and investment growth in 2009 was boosted by infrastructure spending and high commodity prices.
With 243 million people and a GDP of $521 billion, it's a substantive enough economy to invest in. The budget deficit is a reasonable 2.1% of GDP, and the current account is in surplus.
Vietnam
VietnamVietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
as one of ASEAN nation may cease to be a low income economy as GDP per Capita reaches an estimated $1,200 in 2010 (or the worst case in 2011).
Egypt
The World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, as of September 2011, is predicting growth of just 1% this year, compared with 5.2% last year — but analysts expect it to regain its growth trajectory when political stability returns. Egypt has many assets including fast-growing ports on the Mediterranean and Red Sea
Red Sea
The Red Sea is a seawater inlet of the Indian Ocean, lying between Africa and Asia. The connection to the ocean is in the south through the Bab el Mandeb strait and the Gulf of Aden. In the north, there is the Sinai Peninsula, the Gulf of Aqaba, and the Gulf of Suez...
linked by the Suez Canal
Suez Canal
The Suez Canal , also known by the nickname "The Highway to India", is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea and the Red Sea. Opened in November 1869 after 10 years of construction work, it allows water transportation between Europe and Asia without navigation...
, a growing tourism network, and vast untapped natural-gas resources. Egypt's 82 million population has a median age of 25.
Turkey
Turkey has the world's 15th largest GDP-PPP and 17th largest Nominal GDP. The country is a founding member of the OECD (1961) and the G-20 major economiesG-20 major economies
The Group of Twenty Finance Ministers and Central Bank Governors is a group of finance ministers and central bank governors from 20 major economies: 19 countries plus the European Union, which is represented by the President of the European Council and by the European Central Bank...
(1999). Since December 31, 1995, Turkey has been a part of the EU Customs Union. Mean wages were $8.71 per manhour in 2009. Turkey grew at an average rate of 7.5 percent between 2002 and 2006, faster than any other OECD countries. Istanbul
Istanbul
Istanbul , historically known as Byzantium and Constantinople , is the largest city of Turkey. Istanbul metropolitan province had 13.26 million people living in it as of December, 2010, which is 18% of Turkey's population and the 3rd largest metropolitan area in Europe after London and...
, Turkey's financial capital
Financial capital
Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc....
, is fourth in the world behind Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
and London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
. Turkey's major cities and its Aegean
Aegean
Aegean may refer to:*Aegean Sea*Aegean Islands*Aegean Region, Turkey*Aegean civilization*Tyrsenian languages, aka Aegean languages*Aegean Sea , a naval theme of the Byzantine Empire*Aegean Airlines...
coastline attract millions of visitors every year.
The CIA classifies Turkey as a developed country
CIA developed country list
In an appendix to the CIA's World Factbook, there is an entry identifying developed countries .The CIA notes that the Developed Countries formThe CIA argues that this list...
. Turkey is often classified as a newly industrialized country by economists and political scientists.