Emerging markets in 2013 2014

Emerging Markets in 2013-14
Will the soft patch for business continue and should companies worry?
Special report by Nenad Pacek
President and Founder, GSA Global Success Advisors GmbH
Co-Founder, CEEMEA Business Group
nenad.pacek@globalsuccessadvisors.eu
January 10th 2013

CEE in 2013 and 2014 – Growth prospects and impact on corporate sales
© 2013 GSA Global Success Advisors GmbH / CEEMEA Business Group 1
Contents
Business in 2012 2
So why have so many key emerging markets slowed down in 2012? 4
The Euro zone mess 4
Has the US economy had a negative impact on emerging markets? 6
Why is the current soft business and economic period temporary in most emerging markets? 9
Emerging Asia 9
Latin America 10
Central and Eastern Europe (CEE) 11
Middle East and North Africa 13
Sub-Saharan Africa 14
Growth outlook by region 15
Emerging Asia 15
Latin America 16
Central Eastern Europe (CEE) 17
MENA 19
Sub-Saharan Africa 20
What should companies do in such an environment? 22
About the author 25
Tables
Table 1: Developed markets, real GDP growth % 8
Table 2: Developed markets, government debt as a % of GDP 8
Table 3: Foreign debt as a % of GDP, regional weighted average and a selection of countries 10
Table 4: Government debt as a % of GDP, regional weighted average and a selection of countries 10
Table 5: Foreign exchange reserves, $bn 10
Table 6: Foreign debt as a % of GDP, regional weighted average and a selection of countries 11
Table 7: Government debt as a % of GDP, regional weighted average and a selection of countries 11
Table 9: External debt as a % of GDP, aggregate CEE and selected countries 12
Table 10: Government debt as a % of GDP, CEE and selected countries 12
Table 12: Foreign exchange reserves (including sovereign wealth fund estimates), $bn 13
Table 13: Government debt as a % of GDP 13
Table 14: External debt as a % of GDP 14
Table 15: External debt to official creditors as a % of GDP, selected countries 14
Table 16: Government debt as a % of GDP, selected countries 14
Table 17: Real GDP growth, %, selected countries in emerging Asia 16
Table 18: Real GDP growth, %, selected markets in Latin America 17
Table 19: Real GDP growth, %, CEE selected markets 19
Table 20: Real GDP growth, %, selected markets in MENA 20
Table 21: Real GDP growth, %, selected countries in Sub-Saharan Africa 22

Over the last few quarters we have been bombarded with news headlines in various serious newspapers about
an emerging markets slowdown. Headlines such as “The end of the Brazil growth miracle”, “The great Chinese
slowdown?”, “Serious concerns about the Turkish economy” or “Poland on the verge of recession” were hard to
avoid even if you wanted to. And even if you miraculously managed to avoid seeing these headlines, any time
you went into internal global and regional meetings, the business reality on the ground did confirm weaker
business in a number of these geographies (luckily, not all of them), particularly in the second half of 2012.
In this paper I argue that companies should not worry too much about the majority of emerging markets and
should continue to treat them with the utmost corporate focus, attention and upfront investment (despite
the current soft patch in a number of important emerging markets). I will go through the reasons later, but
let’s first look at what happened in 2012 and why.
Business in 2012
During 2012 I participated and spoke in numerous internal corporate meetings with multinationals operating in
consumer goods, light and heavy industry, pharma/health, IT or professional services. A quick summary of the
internal corporate meetings held in the second half of 2012 goes something like this and may well sound
familiar to most of you (there are some notable exceptions):
a) Emerging Asia is now softer for business. It is still growing well, but below original expectations and
this is proving difficult to explain to global HQ. Hitting the budget numbers for 2012 was a real
challenge. Also the region accounts for 12-16% of global sales so any slow-down is immediately felt in
global figures and puts extra heat on regional directors.
b) Latin America. Also softer than anticipated, especially Brazil. Still growing, but not as well as
companies expected in late 2011. As the region accounts for 5-7% of global revenues any weakness
can still make a dent in the global budget and put regional managers under pressure.
c) Thank goodness that commodity prices are still mostly overpriced and this is keeping business still in
good shape in key Gulf markets, Russia, a good chunk of Sub Saharan Africa as well as any other
commodity driven markets, at least in terms of top line growth. In these markets companies are still
on the whole hitting or exceeding budgets. Even if North Africa and Levant are proving tougher for
business, strong oil prices are pushing overall Middle East North Africa (MENA) results up and most
companies are still hitting their regional targets. The commodity driven markets of Central Eastern
Europe Middle East Africa (CEEMEA) account for some 5-7% of global sales and are also significant for
global figures.
d) Central and South East Europe – “we did not expect much and we got even less than expected”, is
succinctly stated by one of our clients; this part of the world typically represents some 3% of global
sales and is the region where corporate expectations are the lowest in the next two years (and rightly
so).
e) European Union and non-Eurozone Western Europe slowed progressively in 2012, especially in
peripheral markets, but with weaker results by many companies also beginning to be felt in
fundamentally sound Scandinavia, Austria or Germany. As a market that accounts for some 30% of
global sales for typical multinationals, the chronic European slowdown has had a deep impact on
global results.
f) The US market has been in a small plus for most firms, but also softened in the second half of 2012 as
worries about the fiscal cliff intensified (and the fiscal cliff story is not over yet despite the temporary
deal that averted automatic tax rises and automatic spending cuts).
As quite a few emerging economies go through this soft patch, competitive pressures have increased at
unprecedented speed, sophistication and complexity in all emerging markets during 2012. This is particularly
true in markets where real GDP is still growing very well (or in markets where companies expected extra high
GDP growth in 2012, but which did not necessarily materialize). The increase in competitive activity, which in
my opinion will only intensify is no surprise for at least a few reasons.
First, when there is little or no growth in the developed world (which accounts for over 65% of global GDP at
market exchange rates and some 50% calculated at purchasing power parity), all corporations are chasing
growth in the markets where GDP is still growing strongly (and these are mostly in the emerging markets
arena).

Second, multinationals are beginning to step up their efforts in all emerging markets. The corporate shift of
focus to emerging markets is, to put it mildly, tectonic. And those companies that are currently resisting or
delaying investing in high growth initiatives in emerging markets should urgently snap out of hesitation mode.
As I argued extensively in my last book “The Future of Business in Emerging Markets: Growth Strategies for
Growth Markets”, any multinational that does not build a sustainable business in emerging markets that can
outperform all kinds of competition year after year will have a hard time creating any consistency of global
earnings and steady growth. I would also argue that many underinvested multinationals (those sitting on
their cash and those managing their quarterly figures instead of managing their business) might not even
survive the next decade or two. Multinationals should take a look at the Fortune 500 list today and 25 years
ago – only 40% of companies on the old list are still on it today. Most multinationals do have cash reserves or
access to international or domestic financing to build long-lasting local infrastructure, capabilities,
competencies and brands in every single emerging market. They should use this financial advantage sooner
rather than later. If they do not then somebody else will eat their lunch.
Third, companies originating in emerging markets are also stepping up their domestic, regional and often
global expansion. This includes major companies originating in emerging Asian economies (including some 700
Chinese companies with global ambitions), but also those originating in Brazil, Turkey, South Africa, Mexico,
just to name a few. The difference between today and perhaps 10-15 years ago is that now these companies
have ample access to equity and debt financing, but also many have reached a good size that enables or forces
them to look beyond their domestic borders. They are also proactively hiring talent from multinational
companies and paying top dollar to buy the expertise they sometimes have lacked. They are tough competitors
and should not be underestimated.
Fourth, medium sized companies from the developed world are increasingly targeting emerging markets for
growth. They are struggling with top line growth in their home markets of Germany or USA and are spreading
their wings and taking away market share from larger multinationals. They are hard to compete against. They
are flexible, quick to react and usually have aggressive pricing combined with high quality products. Companies
should monitor them in the same way they monitor their big global competitors.
And last but not least, purely domestic players are becoming very formidable competitors even in markets
where companies would not necessarily expect that to be the case. Just ask some of the executives in the
beverage industry how many local beverage players are popping up in some small Sub Saharan markets every
year.
Therefore, the second half of 2012 has been marked by a combination of slowing economic growth in many
emerging markets, combined with an astonishing acceleration of competitive pressures. A sort of double
whammy that is not easy to deal with, especially when it comes to managing expectations from the
headquarters.
Whilst the acceleration of competitive pressures will inevitably continue, I do believe that the economic
slowdown in many emerging markets will prove fleeting. Because the economic slowdown will be
temporary, companies should not derail or postpone their emerging markets growth initiatives. Any
company that does so will leave cracks in its armor that will quickly be exploited by both traditional and new
competitors aggressively. Companies that get cold feet during this slower period will lose share. Regaining
this lost share will either be impossible or prohibitively expensive. Multinationals should take a
countercyclical view -- any such temporary economic slowdown is a wonderful opportunity to grab more
market share when some more short-termist competitors get nervous and postpone growth initiatives.
Now, let’s look at what has caused the growth slowdown in a number of emerging markets. And then I will
explain why this soft patch is temporary in most emerging market regions.

So why have so many key emerging markets slowed down in 2012?
The Euro zone mess
“The surest sign that intelligent life exists elsewhere in the universe is that none of it has ever tried to contact
us”. This wonderful quote from the reclusive US cartoonist Bill Watterson is the principal reason why emerging
markets are currently going through a temporary economic slowdown. Well, sort of… but at least I sometimes
think that the essence of it is actually hidden in this quote. It all has to do with the late, inadequate and
misguided economic policies we have been witnessing in the Euro zone and which are now impacting the rest
of the world. Because of its size, the Euro zone does have an impact on all countries around the world, and
particularly on those that export to it.
Every time I look at how European politicians have been trying to resolve the Euro problem and the European
sovereign debt crisis, the above quote is what comes to my mind. I just can’t help it. At first, I would laugh
thinking about that quote, but it is not funny anymore when put in the European context and even global
context.
The Euro zone ended 2012 in a recession, but the 2012 recession is mostly a self-inflicted recession. The
global crisis that started in 2008 originated in the USA where toxic assets were sold not only to unsuspecting
domestic buyers in the USA, but also exported to many institutions in Europe, including its banks. When the
global crisis began, government debt as a % of GDP in most EU markets (except Greece) was within
international benchmarks and sustainable. So a recent claim by Jens Weidmann at the European Central Bank
that “European governments caused this crisis and the governments should solve it” is a diagnosis that does not
make sense. And worse, this claim basically puts the supposed governments’ fiscal irresponsibility at the heart
of the crisis and then prescribes the cure of fiscal tightening as the only real cure to the current economic ills.
We should remember that the reason why government debt exploded in a number of Euro zone markets in
recent years is due to
a. a transfer of private bank debts to the government balance sheet so that tax payers have to pick up
the bill (just ask the Irish how they feel about this) and
b. fiscal tightening during a time of low private confidence in 2009 and still today has caused tax
revenues to plummet (just as economic theory and practice would predict) and government debt to
rise.
As government debt has soared, this has prompted even more calls for increased fiscal tightening, but
tragically, when private and corporate confidence has still not really recovered. So we have ended up in a
vicious, downward spiral.
What politicians in Europe (and the Republicans in America) are sadly not asking is the following:”If
corporations and consumers are not willing to spend and if government spending goes down at the same time,
who is going to buy?” If no one is buying, who is going to sell? If no one is selling, how can companies justify
having people employed and making investments? And when people lose their jobs, they will buy even less…. I
find it astonishing that there are still economists and government officials out there who believe that an
economy cannot suffer from the lack of demand. The same group also believes that recessions are self-
correcting. Yes they are, but self correction can take a very long time (remember that Keynes said “In the long-
run we are all dead”) and while waiting for a self-correction people can lose their businesses, jobs, homes and
savings. In such extremes only those companies and individuals with large amounts of cash will flourish by
buying distressed assets.
I have written extensively about the causes of the European crisis and possible solutions in my last two books
and here is a quick summary of why the Euro zone will struggle to recover in 2013 and possibly longer.
1. The recession in the Euro zone has affected most markets around the world to some extent, just look
at the double digit falls in Japanese, Brazilian or Chinese exports to the EU. As many markets around
the world go through a softer patch, exports from Europe to other markets are suffering too. So the
big export engines, markets such as Germany, Austria or Finland, are feeling the heat too. The Euro
zone has pushed almost the whole world into an unnecessary slowdown because it accounts for some

30% of global output. It is too big not to have an impact on other regions. And the current downturn is
hurting the Euro zone itself the most.
2. One obvious solution that has been historically proven would be to engage in quantitative easing
(central bank buying government bonds) and then governments using the proceeds to engage in fiscal
stimulus programs (remember that governments should temporarily increase spending during the
time of slow private and corporate confidence so that someone actually starts the process of buying).
This would kick start growth and would help private confidence to return. And as growth returns and
becomes more robust, the government debt burden as a percentage of GDP would start falling. And
the governments could slowly withdraw from extra fiscal spending as the capitalism engine stutters
back to life. Will this happen in Europe? Sadly, no. Unlike the Federal Reserve in the USA (which has a
double mandate to focus on both growth and inflation), the European Central Bank focuses only on
price stability and does not have a mandate to engage in quantitative easing. This means that
governments will have to borrow in the open markets and markets will demand fiscal austerity in
return for extending financing, particularly in peripheral Euro zone markets. It also means that we will
not get any fiscal stimulus programs and many markets in the Euro zone will go through a difficult, job-
destroying, economic self-correction. At the moment many peripheral markets are borrowing at
reasonable rates following Mario Draghi’s statement “we will do whatever it takes to preserve the
Euro” and following his Outright Monetary Transactions (OMT) announcement, but the condition
attached is still that markets would have to commit to deeper austerity before having their bonds
bought by the ECB. Since the OMT announcement, the ECB has bought a zero amount of government
bonds in secondary markets, but luckily the announcement itself reduced the borrowing costs for
many EU markets, including those in the periphery. The markets might call this a bluff at some stage
and yields could rise again (although theoretically, the ECB with its money printing ability, could buy all
outstanding government bonds in the Euro zone tomorrow morning).
3. Despite having access to large volumes of liquidity provided by the ECB, banks in Europe are not
lending much. Not only do many still have dodgy balance sheets as a legacy of buying nicely packaged
American toxic waste (from those doing “God’s work”, remember that quote?), but they also have
massive exposure to sovereign bonds in the Euro zone and rising non-performing loans as Euro zone
unemployment ticks up. They also still need to meet the new capital requirements (which are luckily
being relaxed a little) and are hoarding cash. Will they lend more in 2013 compared to 2012? Not
really. Will they reduce their exposure to emerging markets? They have already done so. Just ask
companies that have been waiting for European banks to engage in loan syndications for various
Asian, Latin American or Middle East projects.
4. Government debt as a GDP is now close to 100% of GDP (it should not be more than 60% based on
international benchmarks and based on the Euro zone Maastricht criteria). This means that virtually all
EU governments are likely to continue to cut spending and increase taxes, both of which are
recessionary triggers when private and corporate sectors lack confidence. In fact, only the “very large
strategic” Euro zone markets of Luxembourg, Finland, Slovenia and Slovakia have government debt
below the 60% threshold. Deleveraging from such high levels of debt (especially with austerity policies
in action) could actually result in a lost decade for the Eurozone or at best, sub-par growth.
5. And now the biggest issue of all: a number of current European initiatives (such as banking union
which has been initiated, the European Stability Mechanism (ESM) fund, OMT initiative, the drive for
fiscal union, fiscal austerity, liquidity injections to banks etc) are mostly dealing with symptoms; they
do not really resolve the underlying problem that caused the unsustainable boom in private debt in
markets such as Spain or Ireland and that is currently causing all the political, economic and social
friction. The underlying problem is that the Euro was introduced into markets that cannot live with
the fixed exchange rate. Only globally competitive economies with ultra strong export sectors can live
with a fixed exchange rate. Clearly a number of Euro zone markets do not fit this profile, including Italy
which has been steadily falling down the competitiveness rankings for a number of years. In other
words, even with the current hard economic adjustment (that is destroying jobs and growth) the euro
is still over-valued for a typical Spanish exporter and will continue to be so for a long time. The
underlying design of monetary union continues to be flawed. However, the current attempts to drive
through a fiscal and political union (which would enable the continuation of the common currency) in
the Euro zone could easily fail at some stage. The backlash from peoples in nation states could come

sooner or later, especially if austerity continues to increase unemployment and hardship (as it is
doing). The latest calculations from a prominent university in Germany even show that it would be
cheaper for Germany or Finland to go back to their own currencies than keep providing endless, long-
term guarantees to other nation states in the Union. And the poorer countries know that the only real
way to make their exports or tourism competitive again would involve going back to their own
currencies. I have long argued that the way to preserve the grand, good ideas of the European Union is
to keep the parts of EU integration that make sense (free trade, free movement of people etc) and to
ditch those that do not make sense (a common currency). The sooner this is done, the better it will be
for the EU long term. If six strong exporting nations say we want to have a monetary union, that is
fine, but others should join it only once they truly converge.
I am writing this is as a friend of the European Union project. For the sake of my three daughters and all of us, I
want Europe to avoid conflict and wars and I want it to preserve its social cohesion. However, the current
obsession with the economically strange idea of a monetary union in a mish-mash of countries is not helpful.
Try to think of any common currency benefit and you will struggle to find anything except a reduction in
transaction costs and some day to day convenience. The existence of the euro in more than 6-7 core
competitive countries is just causing current political friction that did not exist before in what was a reasonably
well functioning EU. The political and financial elites are pushing for the preservation of the common
currency against both economic and common sense. This will continue to cause problems in the basic
functioning of the Union going forward and it will keep corporate and private confidence below average in the
years to come. Because European politicians have made the commitment to preserve the common currency, I
will repeat my long held view that many of you have heard in my various speeches. The euro will be with us in
the short-term (perhaps for a number of years still), but because the exchange rate will still be too strong for
many countries, the problems will come to the surface again and again if the monetary union stays intact. And
it could well be that ultimately it will be the people who will decide the fate of the monetary union. Many
peripheral markets are already at the breaking point in terms of unemployment and especially youth
unemployment. If their conditions continue to deteriorate, be assured people will vote in different kinds of
politicians sooner or later. Sure, a short term storm from a disintegration of the Euro would be massive and
bad news for business for a year or so. But like with all such crisis in economic history, the storm would swiftly
pass as some currencies fall and get oversold. Overselling will attract buyers and local currencies would gain
strength gradually.
6. It is not helpful when the “chairwoman of Europe” Angela Merkel shows up on public television before
New Year to say that: ”The economic environment next year will not be easier, but more difficult…The
crisis is far from over.” Economic history teaches us that economic recoveries are partly about
rebuilding confidence. I always say that 50% of economics is about confidence and psychology.
Politicians should know better than spooking what is already desperately fragile private and corporate
confidence in such a manner.
To conclude, although Europe is not the original epicenter of the crisis, the above described self-inflicted
wounds are not only hurting Europe but, because of the size of the European economy, damaging growth in
many geographies around the world. And this is the principal reason why so many emerging markets have
recently gone through a softer patch for growth and business (as their exports started to struggle).
Has the US economy had a negative impact on emerging markets?
As the place where the 2008 global crisis originated, it certainly had a profound impact on the rest of the world
and gave us the biggest peacetime global recession in 80 years. However, the US economy is currently
outperforming Europe for essentially two reasons: first, the chairman of the Federal Reserve Ben Bernanke
(the scholar of the Great Depression of the 1930s) has rightly engaged in a series of quantitative easing
programs (buying government bonds and toxic waste assets from banks). Such new monetary emission (read:
money printing) does help at a time of weak corporate and private confidence. It puts fresh funds into the
government’s budget and into wounded banks. The latest version is buying $85bn per month of long dated
government bonds (benefiting the government) and mortgage backed securities (banks benefit as this
strengthens their balance sheets). Secondly, the US government (which is pro growth unlike many in Europe)
has used these newly created funds to create demand (when demand from corporations and households is so
dampened). Ben Bernanke of course knows that temporary quantitative easing programs do not create

inflation until there is sustainable job creation and private demand. This is why he has made his commitment to
keep doing it until unemployment falls to 6.5%. I am sure every Spaniard would love to have an independent
central bank with a goal of that kind! (By stepping out of the Euro zone, this would be instantly possible).
But there is a short-term impact on emerging markets coming from the “fiscal cliff” talks. (The “fiscal cliff”
refers to the $600bn per year expiration of tax cuts and the automatic beginning of spending cuts.) Lack of
agreement would cause the US economy being pushed into a recession. The uncertainty about the deal
between the Democrats and the Republicans spooked global markets in the second half of 2012 and may
continue to hurt emerging markets until a lasting resolution is found.
Just as we entered 2013 US politicians prevented the automatic spending cuts kicking in and also stopped the
tax increases that would have hit 99% of Americans. While this initially sounded like good news, the truth is
that the deal merely postpones the fiscal cliff by about two months. In the coming weeks and months there
will be further talks about raising the US government debt ceiling as well as talks about the fiscal deal. Many
CEOs in America will therefore continue to complain about a “lack of visibility” and the mountain of debt that
the economy is generating each year. Any lack of clarity keeps corporate investments low. Ongoing fiscal cliff
negotiations will keep corporate confidence below par and already indebted US consumers will continue to
delay spending. And we are not going to get another fiscal stimulus program. In fact, some members of the
Federal Reserve are now questioning the continuation of the quantitative easing programs. With US
government debt hitting some 100% of GDP (essentially as bad as the Eurozone), there will be ongoing political
pressures on the authorities to make savings and increase taxes in the coming years.
Therefore, the US economy will not prove to be very helpful in 2013 when it comes to stimulating global
growth. Some investment houses in America actually believe that the US market dipped into recession in the
second half of 2012 and that the current growth figures will be revised downwards in the coming months –
let’s see if that is correct. But the US will still outperform the Euro zone in the short-term (over the next one or
two years) because of its more proactive economic policies in counteracting the lack of demand.
On aggregate, the US and Western Europe constitute over 55% of global GDP (at market exchange rates) and
therefore will continue to keep growth elsewhere in the world under a degree of unpleasant pressure, volatility
and uncertainty in the short-term.
The Japanese economy is also on a slow growth trajectory. In fact, the figures could be revised downwards in
the coming months (the Japanese authorities always make large revisions, and usually downwards). Companies
can’t rely on Japan as a growth market either. And this market represents some 9% of global GDP.
Most multinationals hoping for a big sales growth boost in the US, the Euro zone and Japan are hoping in
vain. This is another reason why they should treat emerging markets with utmost seriousness and undertake
upfront investment in as many regions as possible. As I will demonstrate in the following pages, this is
because emerging markets’ economic fundamentals are far superior to those of the developed world (with
the exception of a number of Central Eastern European markets). This means that most emerging markets will
not only continue to outperform developed world in terms of growth, but most of them will bounce back
from the current soft patch much quicker than the developed world!

Table 1: Developed markets, real GDP growth %
(the forecast is base case, but risks are on the downside)
2011 2012 2013 2014
USA 1.7 2.1* 1.9 2
Euro Zone 1.4 -0.4 0** 0.9
Japan -0.7 1.4* 0.2 0.6
Germany 3 0.9 1 1.4
France 1.5 0 0 0.7
Italy 0.3 -2.2 -0.4 0.2
Austria 2.7 0.8 0.9 1.3
Finland 2.7 0.4 0.9 1.4
Greece -7.1 -6.3 -4 -1.5
Netherlands 1.1 -0.8 0.2 0.8
Spain 0.6 -1.5** -1.2 0.3
Sweden 3.9 1 1.4 1.7
United Kingdom 0.9 -0.2 0.2 0.7
Australia 2.1 3.6 2.9 3
Canada 2.6 2.1 1.9 2.4
Switzerland 1.9 0.5 0.8 1.2
*With a possibility of downward revision;
** The chance of another shallow recession is a good 45%;
***I wonder why electricity consumption in Spain was -5%. There is something wrong with statistics in Spain it
seems. It is hard to believe that Spanish GDP is down just 1.5% with African style unemployment levels….
Table 2: Developed markets, government debt as a % of GDP
(anything above 60% of GDP is not seen as sustainable and will most likely be deleveraged in a combination of
tax increases and spending cuts – which always hurts growth and business)
2011 2014
USA 92 103
Euro Zone 87 99
Japan 231 260
Germany 80 78
France 86 92
Italy 120 125
Austria 72 76
Finland 49 51
Greece 170 193
Netherlands 65 73
Spain 69 94
Sweden 38 35
United Kingdom 85 90
Australia 26 27
Canada 34 34
Switzerland 36 35

Why is the current soft business and economic period temporary in most emerging
markets?
The answer is relatively simple: most emerging markets have good, very good or excellent economic
fundamentals (with a few exceptions as you will see later in the text). When houses are built on good
foundations they last longer and don’t crack or sink into the ground. Countries are similar. Let me explain a few
strategic arguments and then take you on a trip to each region.
Emerging markets growth slowed from 7.4% in 2010 and 6.1% in 2011 to just 4.7% last year (still subject to
some, probably downwards, revision). This is the slowest since 2009 when overall emerging markets growth
dipped below 2%. It is also below the potential mid-case scenario which I believe to be between 5-6% per
annum in the next decade.
There is no such thing as “decoupling” of emerging markets. This notion was introduced some years ago and it
assumed that emerging markets are now completely independent from anything that happens in the
developed world. Because there is no decoupling they must, to varying degrees, feel any downturn in the
developed world. But there is partial “decoupling” taking place as domestic demand in many emerging
markets is making countries more resilient than at any time over the last 150 years.
As I will demonstrate in the following pages, most emerging markets are now more resilient than ever. They
will grow on average 3-4x quicker than the developed world in the coming decade. And they can bounce
back from any downturn faster than the highly indebted parts of the developed world.
This is because most emerging markets have no sizeable debts and therefore have no need to deleverage, they
have record accumulations of foreign reserves (which serve as buffers in case of any speculative currency
attacks), most banks in most emerging markets continue to lend (which enables private and corporate
investment) and domestic confidence in many markets is much better than in the developed world. Most
importantly, in many markets there is an ongoing shift to domestic demand as a key driver of growth and the
relative reliance on exports to the developed world is shrinking. This is particularly true of many Asian and Latin
American markets. None of the above was the case during the 1990s when we had the succession of major
emerging market crises in Mexico in 1994, Asia in 1997, Russia in 1998, Brazil in 1999 and then Argentina etc.
Seasoned executives do remember these crises and of course are cautious about any overly optimistic
emerging markets outlook. But this time, the emerging markets house is built on far better foundations. These
markets are not perfect and there are some risks in a number of geographies, but the fundamental differences
between now and the 1990s are massive.
Emerging markets now hold over 80% of global foreign exchange reserves, they buy half of the world’s
exports and have more than 80% of the global population (which is also increasing by over 70m people every
year). At purchasing power parity, they also account for half of global economic output.
Emerging Asia
Let’s look at how emerging Asia has improved its fundamentals ever since the unhappy events of the late
1990s.
First, emerging Asia has a very low foreign debt accumulation. The weighted average of key markets shows just
17% of regional GDP (countries usually need external help and run into trouble when it hits 70% of GDP). This is
the lowest regional foreign debt accumulation in the world. It indicates that markets and its private entities do
not need to deleverage and can engage in corporate and private investments (and many are doing so).

Table 3: Foreign debt as a % of GDP, regional weighted average and a selection of countries
Emerging Asia weighted average 17
China 9
India 20
Indonesia 28
Malaysia 27
Philippines 26
Taiwan 21
Thailand 31
Secondly, government debt (which is such a burden today in the United States, Eurozone and Japan) is just
42% of regional GDP (less than half of Eurozone or US public debt). Anything below 60% of GDP is considered
sustainable. The important thing about these figures is that they show emerging Asian governments will not
need to deleverage in times of economic crisis. Also, in case of any downturn, there is plenty of room for fiscal
stimulus programs (which was demonstrated in many markets in 2009). And there is scope for increasing
government spending to continue.
Table 4: Government debt as a % of GDP, regional weighted average and a selection of countries
Emerging Asia weighted average 42
China 42
India 67
Indonesia 23
Malaysia 56
Philippines 48
Taiwan 50
Thailand 43
Thirdly, foreign exchange reserves are approaching US $6 trillion; the largest accumulation of reserves of any
region of the world (this figure excludes Japan and some small markets like Sri Lanka or Bhutan). Reserves will
exceed $7 trillion in about two years. Emerging Asia now holds some 70% of all foreign exchange reserves held
by emerging economies. These reserves will continue to rise as authorities continue to buy foreign exchange in
a desire to keep their own currencies relatively cheap and supportive of their export strategies.
Table 5: Foreign exchange reserves, $bn
Emerging Asia 5,850
China 3,400
India 249
Indonesia 102
Malaysia 140
Philippines 81
Taiwan 395
Thailand 181
Fourthly, the region runs a current-account surplus of 2% of GDP, a rare thing these days anywhere in the
world. In fact, all the larger Asian markets run a surplus, except India. This shows the underlying stability of the
currencies, and most likely a future trend of currency appreciation. In fact, in the next 5–10 years, all emerging
Asian economies will likely see their currencies appreciate in both nominal and real terms. But Asian
governments will also intervene against excessive appreciation. Due to high reserves, countries can choose to
defend their currencies; an option they did not have back in 1997–98.
Finally, the regional budget deficit is low at some 2% of GDP, and only in India, Malaysia and Vietnam is it
higher than it should be compared to international benchmarks.
Latin America
The economic, political and business transformation of Latin America of the last decade has been remarkable in
a number of countries. Growth has been underpinned by vastly improved economic fundamentals that are
better than at any time in living memory.
Firstly, Latin America is not overly indebted anymore and debt was its Achilles’ heel in the past. The continent’s
foreign debt is now among the lowest in the world with a regional weighted average of key markets of just 20%

of GDP (economic history tells us that countries usually start to default or run into problems when their foreign
debt reaches 70% of GDP).
Table 6: Foreign debt as a % of GDP, regional weighted average and a selection of countries
Latin America weighted average 20
Argentina 30
Brazil 17
Chile 40
Colombia 20
Mexico 18
Peru 23
Secondly, government debt is just 46% of regional GDP, less than half of the levels in the Eurozone or the
United States. At least on this criterion, most Latin American economies would qualify to join the Eurozone –
unlike most Eurozone members, who would not.
Table 7: Government debt as a % of GDP, regional weighted average and a selection of countries
Latin America weighted average 46
Argentina 42
Brazil 56
Chile 11
Colombia 39
Mexico 39
Peru 21
Thirdly, foreign exchange reserves have increased more than threefold in the last 10 years and are now over
$700bn. This figure will rise to close to $900bn in two years. In the likelihood of any economic turbulence, most
governments have enough reserves to intervene in the currency markets (if they choose to do so).
Latin America 750
Argentina 40
Brazil 380
Chile 43
Colombia 35
Mexico 163
Peru 63
Fourthly, the regional current account deficit is remarkably low at just 1.5% of regional GDP. Usually currency
pressures start when the current account deficit is about 4% of GDP or higher. Together with strong inflows of
foreign direct investment this shows underlying currency stability.
Fifthly, the budget deficit is low as a regional aggregate (unlike in the EU, UK or the US), at around 2.3% of GDP.
Sixth, interest rates are still hovering around an all time low and so helping improve access to finance for
households and companies. And they will keep falling in the future. From the current 7% regional average,
interest rates in Latin America are likely to converge to emerging Asian levels of 4% in the next five years.
Central and Eastern Europe (CEE)
Many CEE markets have worse fundamentals than markets across Asia, Latin America or the Gulf. Because of
that many are still in a prolonged period of weak growth or even recession. There are three principal reasons
for that. One is close proximity to a recessionary Euro zone. The other is that large west European banks own
most CEE banks and their lending has been curtailed. And in terms of fundamentals, the overall foreign debt
accumulation is higher in the CEE region than in any other region (comparable only to the likes of Ireland or
Spain where there were real estate bubbles) and is some 65% of regional GDP (just shy of the 70% level where
problems usually arise). This foreign debt is largely a legacy of overvalued currencies in the pre-crisis period
that made imports too cheap (and caused a sharp rise in current- account deficits).

Table 9: External debt as a % of GDP, aggregate CEE and selected countries
(countries in bold are highly leveraged and their slowdown will last longer as consumers and companies
deleverage. Such countries could also be much more volatile in the coming years!)
CEE weighted average 65
Poland 68
Hungary 133
Czech Republic 49
Slovakia 77
Russia 31
Ukraine 78
Romania 74
Bulgaria 89
Kazakhstan 67
Croatia 103
Serbia 87
Slovenia 118
Estonia 86
Latvia 150
Lithuania 80
Turkey 42
Luckily, when it comes to government debt, most CEE markets except Hungary do not have a problem (see
below). However, most governments have decided on implementing some kind of austerity policies that could
actually increase government debts as tax revenues fall and growth disappears. So the likes of Serbia, Slovenia,
Poland could be somewhat vulnerable on this front in the coming few years.
Table 10: Government debt as a % of GDP, CEE and selected countries
CEE weighted average 41
Poland 56
Hungary 78
Czech Republic 46
Slovakia 51
Russia 10
Ukraine 42
Romania 35
Bulgaria 20
Kazakhstan 13
Croatia 55
Serbia 59
Slovenia 52
Estonia 6
Latvia 44
Lithuania 37
Turkey 37
Foreign exchange reserves in the CEE region are similar to Latin America at over $700bn, but Russia accounts
for more than half of that amount (not counting oil and stabilization funds) and Turkey and Poland for some
10% each. So the total number hides some vulnerable markets. See the table below. Hungary, Ukraine, Croatia
and Serbia and the Baltics (and perhaps Romania and Bulgaria) are relatively vulnerable in case of major
problems with accessing international finance. Turkey is vulnerable only in a sense of its reliance on short-
terms loans, but I except this to cease as a problem in the next five-six years.
CEE total 765
Poland 77
Hungary 27
Czech Republic 32
Slovakia n.a.
Russia 398
Ukraine 16
Romania 31
Bulgaria 15
Kazakhstan 23
Croatia 11
Serbia 10
Slovenia n.a.
Estonia 2.5
Latvia 7.5
Lithuania 5.5
Turkey 77
With a relatively low regional budget deficit of 2.9% and the small current account surplus (again mainly
thanks to Russian oil and gas exports) the region looks good by these indicators. The current account deficit
problem exists only in Turkey, Serbia and Ukraine. Ukraine also has a budget deficit problem, while there are
relatively manageable budget deficit issues in the Czech Republic, Romania, Poland or Serbia.

As you can see, except for the foreign debt, the fundamentals in CEE are not bad. But you should be aware of
the issues hindering a quick recovery: in addition to the excessive foreign debt in markets mentioned above
there is the EU recession and its impact on CEE exports, low credit growth or no lending at all (with notable
exceptions still in the likes of Turkey or Russia, or bit in the Czech Republic/Poland) and an unwillingness to
engage in fiscal and monetary stimulus in most countries. In fact, many CEE markets have fallen in to the self-
inflicted austerity trap of a similar kind that we have seen in Western Europe. For country-by-country details
please take a look at our regular country updates.
Middle East and North Africa
MENA economic fundamentals are some of the best in the world when taken as a region (there are of course
bad spots as I will show in the tables below). Total official and unofficial reserves, plus the amounts
accumulated in sovereign wealth funds, exceed US $2.5 trillion dollars (largely concentrated in hydrocarbon-
driven markets). This is the second largest regional accumulation of reserves after emerging Asia and an all-
time-high for the region. The reserve accumulation is also higher than emerging Asia on a per capita basis and
also as a percentage of regional GDP. Even if oil prices fall, the reserves could keep spending fueled for several
years in a number of oil exporting markets (which are the most promising for business in the next few years).
Table 12: Foreign exchange reserves (including sovereign wealth fund estimates), $bn
MENA total estimate 2,600
Saudi Arabia 600
UAE 820
Qatar 130
Kuwait 400
Oman 35
Bahrain 5
Iraq 67
Iran* 100
Jordan 7
Lebanon 51
Egypt 15
Libya 170
Tunisia 7
Algeria 190
Morocco 16
*(but it could be zero!)
Total government debt as a percentage of GDP is low, particularly in oil exporting markets. Oil exporting
markets have an aggregate government debt of 18% of GDP. This is one of the lowest percentages in the
world. The only markets with government debt exceeding 60% of GDP (the international benchmark of
sustainability) in MENA are Lebanon, Egypt and Jordan and Tunisia is on the verge of vulnerability.
Table 13: Government debt as a % of GDP
Saudi Arabia 12
UAE 38
Qatar 30
Kuwait 10
Oman 5
Bahrain 33
Iraq 44
Iran 17
Jordan 69
Lebanon 90
Egypt 83
Libya n.a.
Tunisia 60
Algeria 8
Morocco 53
Foreign debt burden in MENA is small, too, at just 27% of regional GDP. When private and corporate entities
do not have a need to deleverage, countries can also grow better or closer to their potential. The only markets
in MENA where external debt is higher than it should be (i.e., 70%+ of GDP) are Lebanon and Dubai (if we treat
the latter as a separate entity). In these places, growth will be below par for a few years.

Table 14: External debt as a % of GDP
Saudi Arabia 20
UAE 43
Qatar 55
Kuwait 30
Oman 15
Bahrain 60
Iraq 40
Iran 3
Jordan 20
Lebanon 110
Egypt 15
Libya 10
Tunisia 60
Algeria 2
Morocco 40
With strong oil prices, the region is running a current account surplus, with the exceptions of Yemen, Jordan,
Lebanon, Tunisia and Morocco (where the current account deficits are higher than they should be, therefore
indicating some potential currency pressures).
Hydrocarbon economies run budget surpluses while several other have sizeable budget deficits (such as Iran,
Jordan, Lebanon, Egypt, Tunisia and Morocco) and in these markets government spending will be under
pressure for some time. For details, please take a look at our detailed country-by-country reports.
Sub-Saharan Africa
Although Sub Saharan Africa accounts for just over 1% of global GDP (at market exchange rates) it is attracting
disproportionate corporate attention because of solid double-digit sales growth in most countries. Most
multinational companies are crafting proper Africa strategies for the first time.
The good news in terms of fundamentals is that the region is no longer highly indebted. Foreign debt to official
creditors is just 10% of regional GDP, which represents a vast improvement over the 1990s. Yes, quite a few
markets are still dependent on donor inflows but the dependency is far less than in the past.
Table 15: External debt to official creditors as a % of GDP, selected countries
Angola 7
Cameroon 9
Nigeria 2
Botswana 10
Ghana 20
Namibia 8
South Africa 3
Zambia 12
Ethiopia 19
Kenya 23
Mozambique 33
Tanzania 26
Uganda 19
Government debt is also low for the whole region, just one third of the Eurozone and the USA as a % of GDP.
Last year it averaged just 32% of regional GDP.
Table 16: Government debt as a % of GDP, selected countries
Angola 35
Cameroon 14
Nigeria 18
Botswana 18
Ghana 45
Namibia 27
South Africa 41
Zambia 28
Ethiopia 34
Kenya 50
Mozambique 42
Tanzania 47
Uganda 36

Foreign exchange reserves are now over $150bn, an all-time-high but mostly concentrated in South Africa
($48bn), Nigeria ($43bn) and Angola ($30bn). These three countries account for the vast majority of reserves.
The populous Kenya has just $5bn in reserves. But most countries have enough reserves when measured by
months of imports (reserves should cover at least the value of three months of imports as a minimum yard-
stick for stability). Only the following markets are below the 3% threshold now: Ghana (but with oil revenues
this will improve), Namibia, Seychelles, Ethiopia, Burkina Faso, Malawi, Niger, Sierra Leone, Guinea and
Zimbabwe. The ones that could be vulnerable on this measure also include Cameroon, Chad, Zambia, Kenya
and Tanzania.
Remarkably, the whole continent runs a relatively low current account deficit of 3.1%, however the figure is
highly distorted by strong surpluses in some of the oil exporting nations. In fact, companies should be aware
that most Sub Saharan markets (including the important markets such as South Africa or Kenya) run current
account deficits that are much higher than 4% of GDP (which often leads to currency weakness if there are not
enough capital inflows). This is why we have had frequent rounds of extreme volatility with a number of free
floating currencies in the region and this situation will not improve in the coming 3-4 years. For details, please
take a look at our regular country-by-country updates.
The budget deficit for the continent is just 2.2%, again an all-time low. Combined with good government debt
figures, there is scope in a number of countries to increase government spending over the next decade. But
budget deficits are higher than they should be (in larger markets) in Namibia, Senegal, South Africa, Zambia,
Kenya, Mozambique, Tanzania and Uganda. At least in the short-term there will be constraints on government
spending in these markets.
Before I look at outlooks region by region, one can conclude in terms of emerging market fundamentals: they
are better than ever overall and there are only scattered weakness points in Central Europe, a few Middle
East markets and a few currency vulnerabilities in smaller Sub Saharan markets. Most emerging markets
have never been in such a good shape before in terms of economic fundamentals.
Growth outlook by region
(including selected countries)
Emerging markets will continue to outperform developed markets in the coming years. This is not surprising
considering the fundamentals described above. Let’s take a look at each region.
Emerging Asia
Emerging Asia is currently the fastest growing region in the world. This is likely going to continue for the next
5–10 years, and possibly beyond. The region’s resilience during the crisis was remarkable. When most world
economies were collapsing in 2009, emerging Asia grew by more than 5%. Growth exploded to almost 9% in
2010, beating all other regions with ease. In the next five years, emerging Asia will grow some 7%,
outperforming other emerging markets, let alone the developed world. Of course, China’s growth is not
sustainable at these levels but politically it will be impossible to let growth rates sink below 7.5% because it
would go against the overarching government goal of creating “harmonious society”. The good news in
emerging Asia is that growth is increasingly broad based and rests on good fundamentals. Growth will be
supported by exports (although they are currently slower due to the “EU effect” on the rest of the world), rising
domestic demand (especially in China) but also (unlike in the developed world) by solid increases in domestic
credit.
Most governments reacted well to the crisis in 2009 by introducing strong fiscal stimulus packages, deep cuts in
interest rates and employment guarantees. As private and corporate confidence around the world and in the
region plummeted in 2009, most governments in emerging Asia refused to allow their economies to suffer for
too long, and they did not. If there is any larger sustained global downturn, the authorities in key markets will
again react to reverse the downturn and stimulate demand. In the case that any currencies come under threat,
ample reserves exist to defend any speculative attacks with ease (this was not the case in 1997).

Executives running global and regional operations should continue to be bullish about economic and business
prospects in the region. Currencies will continue to appreciate and gradually an expanding proportion of
economic growth will be generated by increases in domestic demand (household, corporate and government).
It is a myth that emerging Asian consumers are not spending more than before. In the last seven years, retail
spending grew by more than 65%, and it is likely that this trend will continue for years to come.
Strategically and especially from a long-term perspective, it makes perfect sense for companies to treat
emerging Asia as the biggest priority in emerging markets for new business development investment and to
go deeper into exploring all sales and manufacturing opportunities. China and India will continue to drive
regional growth, but companies should not ignore other markets. Countries such as Indonesia and Malaysia will
continue to do well. Executives should watch the twin deficits and some unsustainable policies in Vietnam,
monitor that Indian public debt does not climb any higher from relatively inflated levels, make sure they
understand that the savings rate in Korea is low, and appreciate the political risks in Thailand. But overall, these
risks are relatively small and seen as manageable by seasoned regional executives, and do not ruin the broadly
positive outlook for the region.
Table 17: Real GDP growth, %, selected countries in emerging Asia
2011 2012 2013 2014
Emerging Asia 7.4 6.1 6.7 7.0
China 9.2 7.8 7.9 8.0
India 7.1 5.9 6.6 7.2
Indonesia 6.5 6.0 6.2 6.3
Malaysia 5.1 4.4 4.6 4.8
Philippines 3.9 4.7 4.8 4.9
Thailand 0.1 5.5 5.8 5.6
Vietnam 5.9 5.1 5.7 6.0
Latin America
Growth was resilient during the global crisis when GDP fell just 1.8%. The 2010 bounce back was remarkable
and growth reached just over 6% (and of the bigger markets only Venezuela stayed in recession). After growing
4.5% in 2011 and just 3.2% in 2012, we expect growth to pick up again in the coming years. Growth will again
reach 4% this year and then 4.4% in 2014. Regional growth is likely to continue at 4.5–5% per annum until
2020. Most currencies in key markets for business are likely to experience further appreciation pressures over
time and some will continue to be targets of speculative portfolio investments in search of high yields (this
means short term volatility in some currencies is a possibility as such money flows in and out). After the IMF
stated that capital controls on short-term capital movements (largely changing its previous stance) are not a
bad idea after all, we can expect more measures by governments in the region to try to stop speculative
inflows that can push currencies to levels that are out of line with fundamentals.
Countries that are likely to do very well in a very sustainable way in the near future are Brazil (with new
measures to stimulate growth), Chile and Colombia. Brazil, like Turkey or Indonesia will be among the most
exciting markets in the world in the next decade and a temporary slowdown in Brazil should not derail
corporate ambitions for growth and market share gains. Mexico continues to be dependent on US growth and
this could mean that it might not be able to grow by more than 3.5% per annum in the next few years.
However, this will still be respectable growth compared to the developed world. Argentina was booming, but
this was partly driven by a commodity boom and partly by a few unsustainable economic policies (so the
slowdown in the coming years is almost inevitable). Peru is doing well but this is also mainly down to a
commodity-driven boom. Panama will continue to grow some 7% in the next few years. Venezuela, Ecuador
and Bolivia will be relative laggards with substantial risks for multinationals resulting from government policies.
The good news is that the big markets are likely to do well for years to come (on the back of pro-growth
policies and most importantly on the back of very solid fundamentals). The temporary slowdown should not
derail corporate growth initiatives.

Executives should be aware of the risks going forward: much of the region’s growth is still driven by
commodities. A flow of money out of commodity markets would shave off some growth in Latin America, and
this will be inevitable periodically since commodity markets are schizophrenic. But commodity prices do tend
to bounce back so although such issues could derail a quarter or two of business they should not impact
corporate long-term plans.
A second risk, which is more medium term, arises from the following questions: will Latin American economies
manage to diversify their economies, will they manage to consistently reduce inequality, reduce crime and
improve access to education at all levels? Speed in these issues matters. If people see that there is economic
stability but are not gaining personally then the risk arises that some countries could slip back into the more
ideological forms of economic management that can currently be seen in Venezuela or Bolivia and also
Argentina.
The third risk is that Latin America is still a popular playground for portfolio investment, much of which is
purely speculative in nature. If currencies get too strong on the back of such speculative inflows, this would
increase current account deficits, foreign debt will begin to rise and local exports would start to die. Cynically,
this would be a good short-term period for foreign companies, since stronger currencies would reduce import
prices and make people feel a bit richer. But imbalances would grow and trouble would be stored up for later
when speculative funds leave. Again, executives have learned to live with such volatility and ultimately this
should not derail the long-term corporate plans especially since most central banks will try to prevent excessive
currency appreciations.
Table 18: Real GDP growth, %, selected markets in Latin America
2011 2012 2013 2014
Latin America 4.5 3.2 4 4.4
Argentina 8.9 2.7 3 3.5
Brazil 2.7 1.5 3.9 4.2
Chile 5.9 5 4.5 4.8
Colombia 5.9 4.3 4.5 4.9
Mexico 3.9 3.8 3.6 3.7
Peru 6.9 6 5.7 5.6
Central Eastern Europe (CEE)
2011 and 2012 were the third and fourth years in a row when the CEE region underperformed other emerging
regions. Companies will not be able to rely much on external economic conditions to drive sales growth in
many Central and South East European markets for a few years. Things will be better in Russia and other
(largely) commodity driven markets in the east as long as commodity prices hold at elevated levels. How things
change. Between 1999 and mid-2008, CEE outperformed all emerging regions and enjoyed an unprecedented
decade of fast growth, appreciating currencies and general optimism. But as the global crisis hit, it turned out
that a number of growth drivers were not sustainable. Underlying weaknesses were suddenly exposed; 2009
was a disastrous year for virtually all multinational companies and 2010 proved to be a challenging year for
business in most sectors and most countries despite some recent encouraging headline growth rates. Until
recently, growth in Central and South East Europe has been driven only by exports and even that driver has
weakened during 2012 (since most exports go to the Eurozone). Domestic demand is weak in most markets
and this will mostly continue into 2013. When the global financial system imploded the CEE region was among
the first to feel the consequences because of its high dependency on external financing and large exposure to
loans. On top of that most governments in the region did not react well to the crisis and the banks are still not
lending effectively.
Regional GDP declined by 5.9% in 2009, after growing by 5.9% per year on average between 2000 and 2008.
The best years were 2006 and 2007, when growth exceeded 7%, fuelling record corporate sales and profit
growth. An unsustainable credit bubble prior to 2008 means that 7% plus growth will not be reached again for
decades.

Today, most of the regional growth is linked to high commodity prices (the latter helping the likes of Russia and
Kazakhstan, for example). The CIS markets are fundamentally better with low debts and high reserves,
especially in Russia, Kazakhstan and Azerbaijan. However their current good growth is linked to high
commodity prices.
Growth will be uneven across the region over the next few years. It will be weaker in markets with high
foreign debt and in need of deleveraging but will be stronger in less leveraged markets. Less leveraged
markets include Russia, Turkey, Poland, Czech Republic; the first two in particular should be very good for
business for years to come. All four have good fundamentals but Russia has virtually no public debt, low foreign
debt and it is sitting on the third largest accumulation of foreign exchange reserves in the world.
Business is growing well in Russia but oil prices do constitute a risk. If prices were to fall to the $70-80 range
the rouble would come under pressure and businesses will be hit for a quarter or two. Political instability could
create risks in the future, although most companies now choose to ignore this threat since it is difficult to
quantify (like China). Russia is too much of a strategic global player to be ignored. Even if there are temporary
slowdowns, this market must feature prominently in any serious emerging market strategy.
Turkey will be one of the most exciting emerging markets in the world in the coming years, despite the current
slowdown (as authorities try to engineer a soft landing from a previous economic overheating). The
fundamentals are broadly good and further good news is that the government is trying to manage its reliance
on short-term financing from abroad better than it has in the past. To reduce its large current account deficit, I
think the Turkish government will continue to favour a weaker lira rather than having to rely on external
borrowing. This will hurt sales and business in the short term, but it is good news for future sustainability and
over the medium term it will be good for business. In other words, companies should use the current soft patch
to improve market share. It will pay handsome dividends in the future.
This crisis in many CEE markets in Central and South East Europe is temporary and partly cyclical. The region
has a number of fundamental strengths that means that the CEE region has a solid, sustainable future ahead
(once short-term foreign debt deleveraging is over). These strengths are:
• CEE economies are significantly more diversified than those in Latin America or Middle East or Africa
and not dependent on one or two strong commodities
• Education levels are high, feeding competitiveness
• These economies usually combine (still) stable social structures and low taxation
• There is a solid SME sector in many markets
• The region has happy and experienced foreign direct investors who will keep returning
• Public debt is relatively low and much better than in Western Europe
• Highly indebted markets are swallowing the hard medicine now and they will come out of the crisis
with vastly improved balance sheets at private, corporate and government levels – but companies
should be patient and use this time to build stronger market shares. Patience can be quite testing
considering that debt levels in some markets are very high and could take (at the minimum) a few
more years of deleveraging!
• Not all markets are highly indebted and the likes of Russia, Turkey and Poland offer solid growth
opportunities, even in the short term.

Table 19: Real GDP growth, %, CEE selected markets
base case, with substantial downside risks in CE and SEE depending on EU developments and the depth of local
austerity programs
2010 2011 2012 2013 2014
Czech Republic 2.7 1.7 -1.1 0.4 2.0
Hungary 1.3 1.6 -1.3 0.2 1.3
Poland 3.8 4.3 2.1 1.2 2.3
Slovakia 4.2 3.3 2.4 1.8 3.0
Slovenia 1.4 -0.2 -2.3 -1.5 0.5
Estonia 3.1 7.6 2.8 3.3 3.7
Latvia -0.3 5.5 4.9 3.2 3.5
Lithuania 1.2 5.9 2.7 2.3 3.0
Bulgaria 0.4 1.7 0.6 1.6 2.6
Croatia -1.2 0.0 -1.9 -0.2 1.4
Romania -1.7 2.5 0.1 1.2 2.7
Serbia 1.0 1.6 -2.1 0.5 1.8
Turkey 9.0 8.5 2.8 3.5 4.5
Kazakhstan 7.3 7.5 5.2 5.0 5.5
Russia 4.3 4.3 3.8 3.8 4.1
Ukraine 4.2 5.2 0.5 1.2 2.8
MENA
Between 2003 and 2008 the MENA region grew on average by 5.7%. With regional growth at 1.4% in 2009, the
region displayed resilience compared to other regions of the world (the only more resilient region was
Emerging Asia), but was still exceptionally challenging for business, as many key markets sharply deteriorated.
MENA recovered in 2010 and grew by an estimated 4.1%. But social and political unrest threaten the outlook
for at least several markets. If Egypt and Tunisia can achieve some form of normality soon then regional growth
could easily reach 4.5% in the next few years – which will be similar to Latin America, a bit worse than Asia and
Sub-Saharan Africa, but much better than Central and Eastern Europe (where in many markets corporations
and households are still deleveraging and spending less). High oil prices are currently helping major oil
exporters and those economies are booming due in no small part to the “Arab Spring” revolutions boosting oil
prices.
From an economic perspective, the MENA region has often lacked underlying sustainability over the last 15–20
years. And it is not surprising that this underlying problem has dictated how companies have treated the MENA
region. These uncertainties spilled over into corporate perceptions and many regional directors have
consequently struggled to get the resources needed to build a sustainable business in the region. When oil
prices were low (between 1985 and 2004 they fluctuated between US $9 –$30 per barrel – and mostly around
$20), many companies simply treated the region as an opportunistic cash cow, with a corporate structure
largely relying on remote partners and a strategy that was too regional. Most companies did not put enough
internal resources on the ground, especially at the country level.
When oil prices started to climb rapidly from 2004 (culminating at US $147 per barrel in July 2008), corporate
results in hydrocarbon exporting nations improved beyond recognition. The results were also boosted in
several previously sleepy markets in North Africa as their economies started improving. Simultaneously,
Lebanon continued to defy gravity despite massive debts, and Dubai was riding a debt wave. No wonder
companies started to think about how to build on these strong results in MENA and more importantly, how to
institutionalize sales growth into an organisation that would outperform the competition over an extended
period of time. In other words, corporate strategies started to shift from opportunistic remoteness to
systematic depth.

The period from 2005 up until today has seen exceptional growth in terms of systematic corporate investment
in business development, brand building and local presence. In the last few quarters business development
investment increased to all-time highs, especially in hydrocarbon exporting economies (except Iran). On the
back of stronger economic fundamentals competition has been heating up in MENA (just like in other strongly
performing regions), pushing more companies to take the region seriously. But just as companies started to
treat the MENA region more seriously and plans put in place to invest more in business development, the
political risk (which was latent and hard to quantify for years) suddenly increased, with instability first in Tunisia
and Egypt, and then in Libya, Syria and tiny Bahrain. These eruptions have caused companies to wonder if
similar events might occur in Saudi Arabia, Kuwait, Algeria, Jordan and Morocco. The elevated political
uncertainty will linger on, and global perceptions about the region will probably cause many companies to put
major investments on hold, at least in riskier markets. However, companies should at the minimum continue
to invest in strong hydrocarbon exporting nations to build faster sales growth. These markets are
fundamentally good in terms of debt levels and reserves and are booming on the back of high oil prices.
The business winners in the next few years will be Saudi Arabia, Abu Dhabi (as the wealthiest of the United
Arab Emirates), Qatar, Oman, Algeria and, if political paralysis allows enough spending, Kuwait. Israel will, as
usual, behave more in line with the business cycle in its key export markets, which are mostly in developed
nations. Therefore growth in Israel will be a bit softer in the short term but good over the medium term,
provided political issues do not intercede one way or the other.
Iraq should boom on the back of rising oil output, provided that security can be managed after US troops
pullout. Iran, potentially one of the most exciting markets in the world due to its size, will struggle under yet
tighter rounds of sanctions, with the shadow of military strike looming. Morocco and Tunisia, although under
economic pressure now, will continue to provide single digit growth opportunities for companies. Egypt is
currently a political and economic mess, with no full clarity on how the current political power struggles will
finish. The IMF deal is now critical or the pound will continue to fall. Libya should also be able to restore oil
production fully by mid 2013. If local political and tribal factions can agree on the future, Libya should be an
exciting emerging market for years to come (although its small population will limit corporate activities).
Lebanon will continue to struggle under high debts and significantly elevated political risks. Most companies
expect the steady, unexciting business environment in Jordan to continue.
Table 20: Real GDP growth, %, selected markets in MENA
2012 2013 2014
Saudi Arabia 5.5 4.6 4.6
UAE 3.6 4.0 4.8
Qatar 6.3 5.3 6.2
Kuwait 4.6 3.5 3.5
Oman 5.3 5.3 4.8
Bahrain 3.3 3.4 3.5
Iraq 9.8 9.2 9.5
Iran -5.0 -7.0 -4.0
Jordan 2.6 2.8 3.3
Lebanon 1.2 1.5 2.0
Egypt 2.0 2.8 4.0
Libya 90.0 13.0 9.0
Tunisia 2.8 3.3 4.5
Algeria 2.6 3.5 4.0
Sub-Saharan Africa
Sub-Saharan Africa is attracting the attention of companies wishing to expand in to new territories. Sales
growth is solid in many markets and there is less competition (although it is rising, particularly from Chinese
companies). However, in absolute terms, sales are low, typically representing just over 1% of global sales of a
typical multinational company.

The economic outlook is not bad as long as commodity prices remain reasonably high. The region had several
very good years in terms of growth in the pre-crisis period. Between 2003 and 2008, the region grew by 6.2%
per annum, or twice as fast as the 1990–2002 world average. The rise in commodity prices, inflows of FDI,
stronger currencies, debt write-offs, donor inflows, the rise of South Africa and Nigeria, and improvements in
fundamentals all contributed to a strong pre-crisis performance.
But the region was not immune from the global crisis. In 2009, regional growth slid to just 2.1%, and in per
capita terms the region barely grew at all. But compared to other regions, Sub-Saharan Africa showed
resilience, largely (and sadly) due to a lack of integration with the global economy. Credit was flat (unlike in
developed regions), donor money kept coming in and this helped to maintain s semblance of growth.
The relatively good news is that the region has recovered well on the back of:
• higher commodity prices
• ongoing donor inflows
• strong growth in Nigeria (despite political issues)
• generally good reactions to the crisis by central banks (i.e. looser monetary policies)
• gently improving credit conditions
• stronger economic fundamentals
• improved reserves due to the IMF’s allocation of SDRs (which helped stability and enabled some public
spending increases)
• rising FDI and financing from China, but increasingly from other countries too
• some improvement in corporate spending (largely drawn from corporate reserves)
• higher public spending in most markets (70% of the countries managed to actually increase public
spending in the last few years).
All of the above resulted in stronger domestic demand.
Growth should easily exceed 5% for the foreseeable future. This is respectable compared to other regions of
the world in the post-crisis period. But Sub-Saharan Africa would have to grow at least 8% for a sustained
period to really start improving living standards. Mere 5–6% growth is simply not enough to make a significant
difference.
The three principal risks to growth are lower commodity prices, lower donor inflows and higher food prices.
Donor inflows could become more erratic as developed markets struggle with their own record public debt
burdens (preliminary signs indicate that donor money might slow over the next two to three years). Executives
should also be aware that headline GDP figures can be heavily driven by exports of commodities and that
domestic demand tends to be weaker than the headline figures.
The biggest market in terms of GDP, South Africa, is not growing well and is now re-examining its economic
priorities in terms of growth, employment and cheaper exchange rates. However, Nigeria is growing well and
companies are increasingly prioritizing this large market of some 150 million people.
Other markets attracting corporate attention now are Angola (oil), Zambia (copper), Ghana (also oil driven),
Ethiopia (a population of 80 million), Kenya (services driven, no big commodities to export). Other markets also
worth considering are Mozambique, Tanzania, Uganda, Senegal, Cameroon and the Democratic Republic of
Congo, Botswana and Namibia.
It is worth noting that competition is not as fierce as in other emerging regions and that one can carve out
good, profitable positions and fast growth in many markets. Companies should note, though, a tremendous
increase in competition not only from China and India but also from major multinationals who are designing
new Africa strategies as we speak.

Table 21: Real GDP growth, %, selected countries in Sub-Saharan Africa
2012 2013 2014
Sub-Saharan Africa 5.3 5.4 5.4
Angola 7.5 7.5 7.0
Cameroon 4.2 4.5 4.8
Nigeria 6.3 6.6 6.9
South Africa 2.3 2.8 3.0
Zambia 7.3 7.7 7.7
Ethiopia 6.5 7.0 7.3
Kenya 4.3 5.0 5.0
Mozambique 7.0 7.5 8.0
Tanzania 6.8 6.6 6.7
Uganda 4.1 4.2 5.8
Namibia 4.5 4.5 4.3
Senegal 3.6 4.1 4.3
What should companies do in such an environment?
As you can see, the good news about emerging markets is that the most important markets in Asia, Latin
America, Eastern Europe, the Gulf and even part of Sub Sahara have solid economic fundamentals. The
number of emerging countries with shaky fundamentals is at a historic all-time-low. Any company that is
serious about building a stronger, sustainable business in emerging markets should not forget this. In other
words, companies should not allow the temporary slowdowns in Brazil, Turkey, Poland or India to derail
their medium and long-term plans. Any company that retreats now due to this softer patch and puts focus
and investment on hold will most likely suffer later in terms of lost share, weaker brands and weaker
business in the future. Competition is simply too aggressive.
My recommendation to multinationals is to use any temporary slowdowns to build stronger market positions,
to continue to build brands and to preserve at least a medium-term perspective. Only those companies with a
strong emerging market business in the next decade will be able to consistently improve their global earnings.
They will also be much better positioned when it comes to fighting off rising competition.
In the short term, regional directors face a difficult task of managing expectations, especially within those
companies obsessed with quarterly earnings. Very proactive management of expectations in the short-term is
essential and this paper offers plenty of ammunition to explain to global headquarters what is actually going
on.
Finally, what should companies do now to build sustainable businesses in emerging markets that will
outperform the competition year after year? This is the topic of my most recent book “The Future of Business
in Emerging Markets” and here are a few selected bullet points that you are welcome to cut and paste into
your regional and global presentations:
• Treat EM with as much focus as the developed world
• Do not treat EM as just a profitable cash cow
• “Two headed monster“ with two corporate mindsets is the corporate structure of the future
• Each region/market should get corporate resources based on its own opportunity potential
• Avoid corporate short-termism
• Engage in long range planning and investment for emerging markets
• Enable the execution of long-range plans
• Diversify corporate boards to include executives with EM knowledge
• Global leaders must support upfront investments in EM without the expectation of quick returns

• Do not expect automatic market leadership, but invest substantially in brand building, even if this
means lower profitability during the build up phase
• Deepen country-level local presence, infrastructure, capabilities and competencies, especially for face-
to-face functions – regional strategies are not enough
• Make sure corporate leadership is aware of EM opportunities and challenges
• Decentralize decision making, but not to the extreme
• Flexibility in approach and structures
• Speed, urgency and agility are essential otherwise competition will eat your lunch
• Geographic leadership or at least co-leadership is an important element of the corporate structure
• Do not finance EM expansion just with earnings from EM
• Think about other sources of financing for EM expansion, because properly increasing resources is not
cheap
• Sustain growth initiatives and do not over-react to short-term market turmoil
• Never ignore even the smallest competitor and ensure your competitive intelligence is the best in the
market
• Make gaining market share a priority and that managerial incentives are aligned with long-term KPIs
• Close geographic and resource gaps as fast as possible with a long-term view – make sure you do not
under-penetrate markets
• Use the advantages of a multinational firm while you still have them
• Spend a substantial amount of money on fresh research before any new market expansion
• Accelerate knowledge and best practice exchange within your company
• Intensify market monitoring
• Avoid saying the following to your regional and country managers: “you will get more resources when
you prove there is more business“ – this is short-termist, suicidal Catch 22 in EM
• Consider acquisitions as a way of growing
• Think of set up change
• Avoid doing anything that will damage your long-term business
• Keep shifting R&D and manufacturing to the most competitive and most appropriate locations
• Never underestimate the value of personal relationships in EM
• Contingency planning and execution are critical
• Rethink innovation to compete in as many market segments as possible
• Make sure your product portfolio always matches rapidly changing market/customer/consumer needs
and competitive pressures
• Frequent, scientific, granular and per country market research is needed to keep track of changing
customer needs and to adjust product portfolio
• Innovate also through EM customers
• Accelerate brand building initiatives and sustain them
• Marketing should not be “lazy“ but heavily localized, and customized even to a municipality or
customer level if required
• Rethink distributor relationships and route-to-market if distributors are not willing or able to follow a
fast growth strategy
• Ignore global pay and pay rise scales for EM staff – adjust to local supply and demand as well as
current conditions
• Employ unorthodox measures to attract and to retain scarce white collar talent
• Hire even when you do not need anyone, especially in high growth markets so you do not lose
momentum when you lose staff
• Invest in leadership training for EM – from good managers to great leaders
• Invest in creativity training for all employees
• Mentor local talent to take over country level leadership roles and seek entrepreneurial traits
• Make sure you are totally in tune with the employee needs in each market – motivational drivers
differ and fluctuate.

Please do not hesitate to contact me if you have any questions and if you require more insights into any of the
above mentioned markets or business issues. I hope you found this paper useful and you are welcome to pass
it on to other global colleagues if you think they would benefit.
For more details on CEE and MEA markets please refer to our regular country updates.
I wish you a successful and healthy 2013! Safe travels and I hope to see you soon at our upcoming CEEMEA
Business Group meetings.
Nenad Pacek
nenad.pacek@globalsuccessadvisors.eu

About the author
Nenad Pacek
Nenad and his businesses currently advise global and regional directors of over 300 multinational corporations.
He is founder and president of Global Success Advisors (global business and economic advisory) and co-founder
of the CEEMEA Business Group corporate service (advisory for regional executives running Central Eastern
Europe, Middle East and Africa). The advisory focus is on helping executives understand economic/business
outlooks for virtually all countries around the world and on helping companies build strategies for sustainable
growth in emerging markets.
Nenad is the author of “The Future of Business in Emerging Markets: Growth Strategies for Growth Markets”
(2012), “The Global Economy” (2012), lead author of “Emerging Markets: Lessons for Business Success and
Outlook for Different Markets” (2003, 2007), and a contributor to the book “The Future of Money” (2010). He is
one of the world’s leading authorities on economic and business issues that concern multinational corporations
seeking faster growth internationally and those that concern governments seeking faster economic growth. He
performs on average two speeches/advisory sessions every week at various corporate meetings on issues
ranging from global, regional and country level economic/business outlooks to best business practices for
outperforming competition internationally. In corporate circles he is well-known for not using any notes or
power point slides while speaking and engaging in discussion.
Nenad is former Vice President of The Economist Group (Economist Intelligence Unit) where he spent almost
two decades advising multinationals on economic and business issues and managing several business units in
Europe, Middle East and Africa and one business unit globally. He chaired over 100 Economist Government
Roundtables with Prime Ministers/Presidents and their cabinets throughout Western Europe, Eastern Europe,
Middle East, Africa and Latin America.
Nenad is a board member of the Center for Creative Leadership (globally no. 1 provider of leadership
education). He is guest faculty at Duke Corporate Education (globally no. 1 provider of corporate education),
Notre Dame Executive MBA and a number of corporate universities.
He was educated in Austria where he studied international business, finance and economics. Nenad lives with
his wife and three children near Vienna, Austria. He spends his rare free time mostly with his family, but
occasionally sneaks out to play basketball, tennis, golf and to ski and swim.
Contact: nenad.pacek@globalsuccessadvisors.eu
© 2013 CEEMEA Business Group*
CEEMEA Business Group currently works with senior leaders of over 300 large multinational companies operating in the Central Eastern
Europe, Middle East and Africa regions, helping them understand economic and business outlooks globally, regionally and at country levels.
Regional and global executives also receive regular advice and updates on best practices for expansion and success in emerging markets.
Executive members of the CEEMEA Business Group can also attend regular peer group meetings held throughout Europe and in Dubai.
Sources: GSA Global Success Advisors GmbH and CEEMEA Business Group research. Basic data sources come from central banks, own
intelligence network, CEEMEA Business Group corporate survey, governments and other public sources. Interpretation, views, forecasts,
business quotes and business outlooks by GSA Global Success Advisors GmbH and CEEMEA Business Group. This material is provided for
information purposes only. It is not a recommendation or advice of any investment or commercial activity whatsoever. Global Success
Advisors and CEEMEA Business Group accept no liability for any commercial losses incurred by any party acting on information in these
materials.
Contact:
Nenad Pacek, President and Founder, GSA Global Success Advisors GmbH; Co-founder, CEEMEA Business Group
M: +43 676 646 0607 nenad.pacek@globalsuccessadvisors.eu www.ceemeabusinessgroup.com
*a joint venture between
DT-Global Business Consulting GmbH, Address: Keinergasse 8/33, 1030 Vienna, Austria,
Company registration: FN 331137t
and GSA Global Success Advisors GmbH, Hoffeldstraße 5, 2522 Oberwaltersdorf, Austria
Company registration: FN 331082k

www.allenovery.com
Allen & Overy has one of the largest and best known
practices in the CEE region and is one of the few
major international firms with a well established
and expanding presence. We have offices in five key
centres: Bucharest, Budapest, Bratislava, Prague and
Warsaw, and the offices have close working ties
and are fully integrated with our global network.
Consequently, we offer a seamless service to
our clients across the region and beyond.
Lawyers operating from these offices also co-ordinate
projects in other Central and South Eastern European
countries, particularly Ukraine, Kazakhstan, Bulgaria,
Croatia, Serbia and Slovenia. In each case, we work
closely with a small number of experienced local law
firms who have worked with us on successful large
scale and international transactions in the past.
Our clients value the fully integrated service we can
provide for domestic and cross-border transactions
across all practice areas in the CEE region, combining
our international experience with local expertise and
knowledge of local market conditions and regulators.
The long-term nature of our relationships with clients
allows us to work with them not just to “paper the
deal”, but as partners in their businesses. We aim to
thoroughly understand their relationships with clients
and suppliers, and to help them identify and evaluate
opportunities and risks. In this way we can work
together to guide and implement their immediate
and long-term strategies.
Allen & Overy is one of the world’s largest international law practices, with 40 offices
in 28 countries. We offer a full-service legal capability for both international and local
organisations through our team of over 500 partners and 2,400 lawyers. We meet the
evolving needs of our clients as their businesses grow, both in established and in
emerging markets. We continue to invest in our practices and our network to ensure
that we remain at the forefront of legal advice and market developments.
AFRICA
Casablanca
GLOBAL PRESENCE
AMERICAS
New York
São Paulo
Washington, D.C.
ASIA PACIFIC
Bangkok
Beijing
Hong Kong
Jakarta*
Perth
Shanghai
Singapore
Sydney
Tokyo
MIDDLE EAST
Abu Dhabi
Doha
Dubai
Riyadh*
*Associated ofﬁces
**Representative ofﬁce
EUROPE
Amsterdam
Antwerp
Athens**
Bratislava
Belfast
Brussels
Bucharest*
Budapest
Düsseldorf
Munich
Paris
Prague
Rome
Warsaw
Milan
Moscow
London
Luxembourg
Madrid
Mannheim
Frankfurt
Hamburg
Istanbul
For more information, please visit
www.allenovery.com or contact:
Jane Townsend
jane.townsend@allenovery.com
Hugh Owen
hugh.owen@allenovery.com
CS1205_CDD-3169_ADD-5092 A4

Company profile - KPMG Central and Eastern Europe Ltd.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 150 countries and have
138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and
describes itself as such.
As the business world changes in response to new political and economic situations, so does KPMG. As a professional services firm,
we provide comprehensive, tailored and industry specific services to meet clients' needs, whether they are multinational or local. The
world's leading companies rely upon KPMG member firms to provide them with high quality professional services. Through our
worldwide network we are able to offer our clients the benefits of a wide pool of skills and experience, while also utilizing an in-depth
understanding of each national market. These factors enable KPMG member firms to carry out international engagements, as well.
KPMG was one of the first professional services firms to align its services along industry lines and still focuses on delivering high-
quality, coordinated services to organizations in five key lines of business: Financial Services; Consumer Markets; Industrial Markets;
Information, Communications & Entertainment; Infrastructure, Government & Healthcare. Companies in different industries have very
different needs - that is why KPMG member firms place an emphasis on industry focus. The targeting of specific industry sectors is
fundamental to our approach.
KPMG in Central and Eastern Europe (CEE) continues to build upon its success in the region with 4300 staff working in 18 countries:
Albania with its branch in Kosovo, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia. In order to meet the needs of
international and regional clients, we coordinate our various businesses across CEE in a unified operating structure. Shared centres
of excellence and infrastructure help to ensure a high level of client service in each location and across the region.
We remain committed to facilitating the future growth of our member firms' clients in the high potential markets of the region.
Audit
• Financial Statement Audit
• Statutory Audit
• Audit Related Services
Tax
Business Tax
• Corporate & Business Tax
• International Corporate Tax
• Indirect Tax
• Mergers & Acquisitions
• Transfer Pricing
• Global Compliance Management Services Driving Tax Performance
• Legal Services
Personal Tax
• Taxation Services to Individuals
• International Executive Services
Advisory
Management Consulting
• Business Performance Services
• IT Advisory
Risk Consulting
• Accounting Advisory Services
• Financial Risk Management
• Internal Audit, Risk and Compliance Services
Transactions & Restructuring
• Corporate Finance
• Transaction Services
• Restructuring
• Forensic

Neumann Partners is a community of commercially-minded executive search professionals who merge
extensive consulting experience into individual state-of-the-art solutions, enabling their clients to access
and attract the very best people within the local, regional and global candidate markets.
The company was founded in 2002 by Dr. Helmut Neumann, and is headquartered in Vienna, Austria.
Helmut Neumann has been active in our business since 1971 and is one of the pioneers in Executive
Search in Europe. Hans Jorda, our CEO, has a proven track record in the developing new markets and
brought together a team of highly-qualified consultants who share the same values:
• Hard work can be fun. We enjoy what we do and we enjoy the people we do it with.
• We respect our partners and earn respect for ourselves.
• We value diversity. Our group consists of people from different cultures with different
backgrounds and interests. We encourage the members of our firm to utilize their unique
experiences and skills and to investigate their areas of interest.
• We share our findings openly with our clients and pass on all relevant information to our
candidates.
• We are experts in what we do. We recognize our responsibility to maintain a high level of
expertise in all relevant sectors - this means continuous learning: We will continue to develop our
skills, our experience base and our tools so that we can provide our clients with the best
performance and service.
Headquartered in Vienna, Austria, we are organised in five regions (Central & Eastern Europe, Western
Europe, Asia Pacific, North America, Latin & South America) with 21 fully owned NP-offices that
currently employ more than 150 specialists.
Our diverse team of consultants has experience across a wide range of practices such as
Consumer/Luxury Goods & Retail; Technology, IT & Telco; Life Sciences, Healthcare & Hospitals; Legal
& Professional Services ; Industry, Automotive & Energy; Sports, Media & Entertainment, and Financial
Services, internationally organised in Competence Centres.
Our services include:
• Executive Search, which is our largest service practice. Neumann Partners assists its clients by
identifying, assessing and on-boarding the most talented business leaders and specialists.
• Neumann Management Colloquium is a state-of-the-art process for evaluating professional
competences along with selected aspects of the personalities of the candidates and managers in
the commercial setting.
• Board Services provide professional support in staffing supervisory boards and advisory councils.
The focus is on continuous improvement in the performance of supervisory bodies as efficient
tools for strategic company management.
• Special Projects are those activities in which we go the extra mile, when our clients require the
support of a whole team of consultants to carry out projects that include complex, creative and
tailor-made solutions – such as setting up entire organisations and teams.

ORACLE FACT SHEET
Oracle engineers hardware and software
to work together in the cloud and in your
data center—from servers and storage,
to database and middleware, through
applications. Oracle systems
• Provide better performance, reliability,
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ORACLE CORPORATION
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