Global Business Predictions for 2019

Despite global trade fears, new investment projects and new business development around world in 2019 will continue to be tied to a country’s Gross Domestic Product (GDP) growth. Generally, the higher the annual GDP growth rate in country, the more new investment is being made in an economy.

While the International Monetary Fund (IMF) believes global growth will slow a bit to about 3.7% in 2019, there remain several countries where the annual GDP growth rate will exceed 5%, including China, India, Indonesia, the Philippines and Vietnam. These high annual GDP growth countries have rapidly growing middle classes that need high growth rates to ensure there are sufficient jobs for the young consumer.

Argentina – “IMF support and fiscal reforms have pleased financial markets, but high interest rates are slowing domestic consumption and the economy is expected to have GDP growth of less than 2% in 2019.   The second half of 2019 will be the time to begin looking at this market again.” Robert Jones, Chief International Officer, EGS

Brazil – Although the recent election of new President Jair Bolsonaro is somewhat of a wild card, he is expected to push fiscal reforms during his first year signaling a very positive message to the market, attracting domestic and foreign investors. Pro-business policies are expected to stimulate the economy and generate 2.4% GDP growth in 2019, creating new opportunities for foreign brands.

Canada – A GDP growth rate of 1.7% due to lower oil prices, new employment laws and regulations plus high business taxes will keep new brand investment and development down in this country in 2019.

Chile – Continued strong domestic demand and solid fiscal discipline should result in a GDP growth rate of 3.4% in 2019, making Chile a solid prospect for foreign brands.

China – Trade tensions with the U.S. and EU, as well as Chinese government controls and barriers, have increased the foreign investment difficulty factor in this market. GDP is expected to slow to 6.3% in 2019 as the government attempts to establish a more sustainable level of growth for the long-term. This ‘low’ GDP growth relative to recent years may be tied to lower consumer spending for the first time in almost 30 years

India – Although higher oil costs are a drag on the economy, GDP growth is expected to exceed 7% in 2019. This is slightly down form 2018. If the government implements regulatory and economic reforms, which it has announced it will do, the business climate could improve for foreign companies in 2019.

Indonesia – Strong domestic demand is expected to sustain a GDP growth rate of 5.2% in 2019. Foreign brand investment will continue due to the rapidly growing middle class consumer base. The presidential election needs watching for its impact on consumer confidence.

Italy – A higher fiscal deficit and disagreement with the EU regarding the new government’s budget have resulted in an estimated GDP of 1.2% in 2019; however, American brands are popular in this market and there is a demand despite the economy’s challenges.

Japan – Manufacturing has recently slowed somewhat and varying oil prices are a negative, but increasing domestic demand should maintain a GDP growth rate of 1.1% in 2019.  This relatively low annual GDP growth rate is still good for this economy

Middle East – “The Middle East (Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Oman and Bahrain), has experienced an economic contraction over the past several years with lower oil prices. Nevertheless, the restaurant segment continues to be strong. Retail is highly competitive and the B2B and B2C sectors offer limited opportunity for compelling new investment opportunities.” Paul Cairnie, CEO, World Franchise Associates.

Peru – Consumer spending is up, the government is pro-business growth, and increased export growth supports a prediction of 4% GDP growth for 2019, providing a solid opportunity for new investors.

Philippines – With an expected GDP growth rate of 6% in 2019, a fast-growing middle class consumer base, and a robust new investment environment, this country will continue to see continued new international brand entry this coming year.

Poland – Although the country’s very strong growth is expected to moderate somewhat in 2019, the current estimate of 3.6% is one of the European Union’s highest economic growth rates. This market offers solid opportunities for foreign franchisors, but market analysis and selection of the correct partner are keys for success.

Saudi Arabia – The 2019 GDP growth rate is expected to be an anemic 2% in 2019. Low oil prices, little new local investment plus fallout from recent legal issues, mean little new foreign investment in 2019.

Singapore – Weaker manufacturing will be offset by stronger consumer demand, with a 2.9% GDP growth rate estimated for 2019. Anti-immigrant legislation has made finding service workers difficult and choice retail space is priced at a premium.

South Africa – With a new government, the country could have an estimated GDP growth rate of 1.7% due to a program of fiscal stimulus. But security and rule of law challenges remain in a country with a huge middle class consumer upside.

Spain – Although 2019 annual GDP growth is expected to slow down from 2.7% in 2018, the pace of new development should continue to be high, especially in the food and beverage sector, in 2019. Retail rents are the price level before the 2008 recession.

Thailand – “As a center for global tourism, Thailand supports more international brands than its own population could support. It is also an excellent showcase of brands and proof-of-concept for the region.   The Thai international brand market is crowded and tightly focused on selected urban areas.  But there is a subset of strong, risk tolerant and qualified investors willing to invest in well-established American brands.” Greg Wong, Senior Commercial Officer, U.S. Commercial Service, Bangkok.

United Kingdom – “The United Kingdom is open for business, but until the details of what Brexit is going to look like have been confirmed, there will continue to be uncertainty in the marketplace. There are, however, still many good opportunities for the brave!” Iain Martin, The Franchising Centre, London.

Vietnam – This market continues to have strong retail sales and has benefitted from factories relocating from China. GDP growth of 6.6% is expected in 2019. American brands are highly desired in this market.

Projected 2019 GDP growth rates for this article are from the ‘Economist’ magazine.

William Edwards is CEO of Edwards Global Services (EGS). Contact him at bedwards@edwardsglobal.com or on +1 949 224 3896.  With 45 years’ experience as a leader in international operations, business development and franchising, William “Bill” Edwards helps clients worldwide navigate the complex and often turbulent global business landscape. EGS provides a complete International Operations and Development Solution for Franchisors. From the initial global market research and country prioritization, to developing new international markets and providing operational support around the world, EGS offers the complete solution based on:

• Experience as Franchisors, International Licensees, Franchisees and Consultants working with 30+ U.S. franchise brands across 40 countries
• Knowledge across Food & Beverage, Retail and Service sectors and diverse cultures
• An operations and development team in over 40 countries experienced in finding,
• qualifying, signing, starting up, growing and fixing intentional licensees
• Trademarked processes and services based on decades of problem-solving experience

 

 
This blog is adapted from an article to appear this month in ‘Franchise Update’ magazine.

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