The CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa)[1] is an acronym for favored emerging markets that was coined in late 2009 by Robert Ward, Global Forecasting Director for the Economist Intelligence Unit (EIU).[2] 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.[3] 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.
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The acronym was coined by Robert Ward, Global Director of the Global Forecasting Team for the Economist Intelligence Unit, 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.
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.[4]
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).[5]
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". [6] 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.[7]
All of these countries are also 'Next Eleven' countries, except Colombia and South Africa.
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.
ETF data as at December 28, 2010:[8]
All of these countries also share similar challenges: unemployment, corruption, and inequality are persistent problems in most of the countries of the group.
The context in Colombia 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.[9] 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%[10] and an oil boom,[11] 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.[12] As foreign money floods the country, infrastructure is currently improving dramatically in the Latin American country.
As Robert Hsu states it:[13] "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.[14]
Vietnam 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).[15]
The World Bank, 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.[16]
Turkey has the world's 15th largest GDP-PPP[17] and 17th largest Nominal GDP.[18] The country is a founding member of the OECD (1961) and the G-20 major economies (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.[19] Turkey's major cities and its Aegean coastline attract millions of visitors every year.
The CIA classifies Turkey as a developed country.[20] Turkey is often classified as a newly industrialized country by economists and political scientists.[21][22][23]