First, improving labour productivity in
emerging markets is a positive that could push
the EM growth story.
Indeed, select emerging
market economies show that labour productivity
has increased for the past few years and is
forecast to increase further, on OECD data.
Second, the next driver of productivity is
demographic trends and the effects of this are
likely to be highlighted in 2018.
In particular, the
rise in the working age population of many
emerging countries has become undeniable. In
fact, since 2010, the working-age population of
less-developed countries has risen 12 per cent
and by 2030 it will have risen more than double
that. Contrast that with developed countries
where the working-age population peaked in
2010, has since fallen 1.6 per cent, and should
fall five per cent by 2030. Much attention has
been focussed on China’s working age
population peaking in 2016, but across emerging
markets, the peak is not forecast until many
decades from now.
Third, ongoing structural reform(‘rainbowism’)
is a key driver of EM prospects. Structural
reforms can be a nebulous term used to advocate for all
manner of change from increasing the political
will of decision makers to reforming laws that
restrict a fluid labour market.
During the Euro
crisis, structural reforms came to be associated
with reform requests from creditor countries to
debtor countries, therefore it is important to be
clear what we mean by the term.