Examine fundamentals, PwC tells companies

Growth in developing markets such as Brazil, Russia and Southeast Asia has been weakened by a barrage of internal and external headwinds over the past 18 months. These range from falling global commodity prices and rising US interest rates to environmental disasters and policy shifts caused by socio-political developments in developed markets.
These events, coupled with China’s recent slowdown, have prompted many critics to question the long-term prospects of markets they once considered darlings. 
While the era of growth markets is not over, they will “mature into more stable markets”, according to a 2017 annual “Winning in Maturing Markets” report by PwC Growth Markets Centre.
Growth markets are projected to account for 65 per cent of global growth by 2021, the report showed, adding that “maturing” rather than “volatile” markets present a wide array of opportunities.
“As we enter 2017, it’s clear that growth markets are on the verge of a new era of leading global growth in which they are projected to enjoy almost two times the absolute growth in GDP as compared to developed markets by 2021, and account for 65 per cent of global growth within the next five years,” said David Wijeratne, leader of PwC’s Growth Markets Centre and author of the report.
“This will create significant opportunities for private-sector players looking to create and deliver value to the billions of people expected to join the middle class in these markets.”
Thai gross domestic product is expected to grow by 3-4 per cent in 2017, improving from 2.9 per cent in 2015 and 3.2 per cent in 2016, according to National Economic and Social Development Board data.
A key driving force is expected to be improved exports, which would further support the expansion of manufacturing and private investment. 
Accelerating agriculture production after the drought would also boost household income and spending, as well as still growing government expenditures and public investment, the NESDB data indicated.
Chanchai Chaiprasit, partner and clients and markets leader for PwC Thailand, said investors needed to understand regional growth variations to prioritise investments in maturing markets.
“Companies that look beyond GDP at the fundamentals that support growth are best positioned to succeed in these markets in the medium to long term.”
Thailand has long been a “kitchen of the world”, as agriculture is one of the main sectors that generate growth. Still, the gap between productivity and infrastructure is much below average, with only 40 per cent of arable land under irrigation, while its cereal yield is about 3,600 kilograms per hectare against the world average of 3,886.
These gaps offer opportunities for companies with expertise in facilitating more efficient agriculture to enter these markets, whether high-quality inputs, farm machinery or tech-driven solutions including mobile value-added services and machine-to-machine applications |to address changing consumer preferences.
This trend also supports Thailand’s bid to modernise its agricultural sector by using automation of farming with robotics, data analytics and sensor technology to increase crop yields, PwC says.