Emerging economies will continue to grow two to three times faster than industrialized economies for the next five years.
However, businesses in Canada have yet to fully exploit new economic opportunities spawned by the changing landscape.
The shift in global economy has only just stated, said Warren Jestin, SVP and chief economist, Scotiabank, speaking at an emerging markets forum Wednesday, in Ottawa.
“You ain’t seen nothing yet,” he said. “The changes over the next five or seven years are going to be absolutely profound. Our challenge is to figure out how we get into the fast growing markets.”
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Effects of these changes, he said, can be seen in efforts being made by various industries across Canada to hitch their wagons to emerging markets, particularly those in Asia.
China, India, Mexico, Chile, Peru and Columbia are all outpacing developed economies by a substantial margin.
“This is where the grow opportunities are going to be,” says Jestin while stressing the importance of diversification within these economies.
Big growth, large population and rapidly growing incomes in those economies are changing the economic reality for Canadian businesses.
“We’ve got to get onboard this wave, because if we don’t, we’ll not be able to sustain the type of prosperity we’ve seen in the past,” says Jestin. “Capturing the growth trend is the key to our prosperity.”
It’s not just India and China, by 2030, the individual GDPs of Turkey, Indonesia, Mexico, Vietnam and Nigeria are on pace to surpass Canada’s, said Gillian Riley, senior vice president of commercial banking at Scotiabank.
“By mid-century, emerging markets are predicted to account for 70% of global trade,” she said. “Right now, less than 12% of Canada’s exports go to those markets.”
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Canada’s traditional trading partners in the developed world are facing prolonged slow growth and structural issues that are likely to hinder them for many years, she added.
“Many companies are realizing the competitive advantage of growing internationally,” said Riley. “There are opportunities for specialized manufacturers, consumer goods producers, service providers and equipment manufacturers, all selling into the global supply chain.”
When it comes to Canadian businesses realizing their global potential, Scotiabank has certainly been practicing what they’ve been preaching.
Last year, the bank tied up with Bank of Xi’an, a Chinese financial institution, and India’s Kotak Mahindra Bank, to help ease the financial transition of Canada-bound immigrants.
There’s a broad consensus within the local business community over Canada’s need to adapt to new economic world order and pare back its reliance on traditional trading partners. However, the private sector has yet to intensify its search for new markets farther afield.