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EMERGING MARKETS BY BOB PAPWORTH


Businesses need to keep a close


eye on emerging markets, given the BRICs’ and MINTs’


signature volatility


JUST A COUPLE OF WEEKS BEFORE CHRIST- MAS, the removal vans were queuing up outside the Quinta de Olivos, a ‘country house’ in one of Buenos Aires’ more prestigious suburbs, as outgoing tenant Cristina Fernández de Kirchner handed the door keys to Mauricio Macri. The significance of this apparently humdrum occurrence is that the house is the official residence of the president of Argentina, and Macri assumed that role after sweeping to power in the country’s November 22 elections. The former mayor of the capital and his ambitious programme of reforms looks set to revitalise his country’s sluggish economy. If Macri is successful, Argen- tina could become corporate travel’s next big thing. That said, the old adage that business


travel is a bellwether of economic recovery is not universally true. The US Central Intelligence Agency’s World Factbook places Chad among the top ten fastest-growing economies, but Ndjamena doesn’t feature heavily on many road warriors’ itineraries.


FACING HEADWINDS It should be noted that ‘emerging markets’ are not necessarily the same as ‘emerging economies’. To complicate matters still further, some markets have a nasty habit of emerging, blinking into the sunlight, only to dramatically disappear back down the burrow.


Russia is the obvious case in point. In its October semi-annual Outlook report on the BRIC nations (Brazil, Russia, India and China), the Global Business Travel Association (GBTA) warned that Russian business travel growth “faces serious headwinds”. In total, the GBTA expects business travel spending in Russia to fall 17 per cent in 2015 to US$17.5 billion, revised down from the 2015/Q1 forecast of a 2.7 per cent decline. “We expect further declines in domestic performance in 2016, as spending falls another 10.1 per cent to US$13.7 billion,” says the report. A much smaller dip in Brazil’s business


travel spend prompted GBTA executive director Michael McCormick to declare: “The BRICs are no longer a bloc when it comes to business travel. A decade ago, it looked like these four nations would


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develop in lockstep, with high rates of growth across the board. But their paths have diverged sharply as a result of the unique political and economic situations in each country. China and India con- tinue to be business travel juggernauts, a reflection of the underlying strength of both economies even in a tough global economic environment. Brazil and Russia, on the other hand, face growing economic turbulence, turmoil and uncertainty.” After the BRICs, and because there simply aren’t enough abbreviations in the corporate travel sector, some bright spark then came up with the MINTs, initially for Mexico, Indonesia, Nigeria and Turkey, al- though the ‘s’ was subsequently capitalised to bring South Africa into the fold. It now looks as though some of the MINTs have holes. Nigeria is battling both Boko Haram and corruption, in both cases with only very limited success. Turkey’s porous border with Syria is being crossed by tens of thousands of refugees and the occasional Russian warplane, incursions which – in both cases – are hardly con- ducive to political and economic stability. Paul East, chief operating officer for the


UK, Europe and the Americas at Wings Travel Management, takes a world view of emerging market fluctuations – and blames the oil price. “First, I’d say that doing business in emerging markets has never been for the faint-hearted and we will see great rises and falls, not just now but in the future – all of this meaning ‘risk’,” he says. “Over the past 18 months the BRIC nations have certainly seen a slowdown in GDP, but their economic downturns started much later than in the UK and Europe, and have been mainly around the oil price.”


In the specific cases of Nigeria and


Brazil, where Wings is particularly active, East’s theory certainly holds up. “In the period 2012-15, their GDP growth was eye-wateringly high, to a point where people said it was not sustainable,” he says. “The oil price was sitting at more than US$100 per barrel and was only expected to rise. Supply was being swamped by demand and corners were cut with con- tracts allegedly being awarded without due diligence undertaken. With the recession knocking on so many of the world’s doors,


BBT JANUARY/FEBRUARY 2016 79


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