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Challenges And Opportunities For Emerging Market Business Leaders

By News Creatives Authors , in Small Business , at July 20, 2021

CEO of Smartlink Communications. Global analyst, consultant and trainer, passionate about leadership, global communications and competition.

The past two years have been uncharted territory for both fiscal and monetary policy. Our current economic resilience is perhaps illustrative both of the degree of innovation from policymakers and sheer adaptability of businesspeople worldwide. What the latter may know better than the former is the degree to which change and upheaval are not a matter of extraordinary circumstances but the general flow of business.

As the World Bank details in its June 2021 Outlook, it may be argued that the most tumultuous period is behind most advanced economies as well as some of the key emerging markets, with real GDP growth rates reversing to the mean.

That, however, leaves a whole array of other effects still to unfold, primarily in the fiscal aftershock of the pandemic, the inflationary pressures of the rebound and, not least, the pressing issues that perhaps only a global pandemic could have relegated to the second page: the further deterioration of trade relations between China and the United States, secular stagnation in main export markets and population ageing.  

This leaves emerging market business leaders who take a long-term view of their businesses facing high rates of uncertainly both in the short- and the long-term. But they likely wouldn’t be where they are if they couldn’t turn uncertainty into opportunity.   

Challenges Ahead 

Fiscal Aftershock 

Initial estimates that fiscal stimulus would be of limited effect when monetary policy is constrained and future fiscal adjustments would be expected by businesses and consumers alike seem to have assumed too much caution in my view. Spending and growth are predicted to take off in the United States as well as in Asia (download required). But I believe the debt pile is highly unlikely to be stabilized by growth, even in the most optimistic scenarios.

In the short-term, most economies that do not happen to issue the world’s reserve currency or are part of the eurozone are exposed to deteriorating credit ratings and will need to adjust spending accordingly in the future. 

In the long-term, the CBO estimates U.S. debt will hit the 195% rate by 2050, and even that assumes significant adjustment. That makes a broad tax raise increasingly likely in the long run. One’s consumers and possibly one’s business activities may face a simultaneous tax shock.  

Compounding Divergence 

The oft-repeated mantra over the 3rd wave of globalization has been one of economic convergence, so much so that it is held as almost axiomatic. The pandemic showed the stark limits of this line of thinking, with many growth stars’ dysfunctions laid bare in my opinion. 

Over time, mean reversion is expected to occur, but I believe the assumption of broad-based growth should be put to rest. Instead, business leaders who take a long-term view may want to reconsider expansion plans using higher-risk premiums for non-Asian countries and reconsider trying to move far away from the East Asian growth engine.  


A productivity boom may indeed come, but even if it does, there’s little indication it would also translate into jobs and broadly shared rising incomes given past increases in productivity haven’t. Consequently, business leaders exporting to Western markets are looking at a long-run increase in inflationary pressures.  

Volume businesses passing down cost increases often face difficulty. There is some indication that they have absorbed a significant part of the increase, but margins can’t turn that into a strategy except in the very short-term.  


Thus far, the impact of trade disputes between China and the United States has been limited while the impact of the Covid-19 pandemic is below the direst initial forecasts. Modern supply chains proved both resilient and far more difficult to reorganize than feared. With negative China sentiment being one of the few bi-partisan issues in the United States, relations are structurally fraught and with the changing appeal of anti-Chinese sanctions in the U.S., I believe there is little indication that the trade war will abate.  

Opportunities Ahead 

Emerging market business leaders do, however, have quite a few reasons to be optimistic. Utilized, these factors could translate into expanding business opportunities. 

The most optimistic scenarios laid out at the end of 2020 have mostly come to pass. Perhaps nowhere more so than in China, which resumed its developing role as a growth engine for the world, particularly Asian neighbors. Initial shocks absorbed, the longer-term play of moving up value chains is paying dividends, particularly for those countries that are enjoying both a still booming export market and the reorganization of value chains, such as Vietnam.  

The pandemic has accelerated technology adoption in advanced economies, but to a more limited extent than initially predicted. In developing economies, the situation is more nuanced, with the pandemic precipitating change at a larger scale albeit in some cases from a lower level of technological adoption. In the case of countries such as Vietnam or China, this translates into significant productivity enhancements that go well beyond remote working. While the pandemic itself directly affected (download required) one of the biggest drivers of productivity, namely the move from primary to secondary and tertiary sectors, it also sped up technology adoption in the latter.  

The World Trade Organization estimated in 2018 that if this trend toward digitalization continues, emerging markets could make up 57% of global trade by 2030, rising from just 46% in 2015.  


Emerging market business leaders who take a long-term view have significant challenges to navigate in the short-term, even as the overall economic outlook brightens. Some, such as U.S. corporate debt for low-volume businesses, may prove potentially fatal if not handled well. Some, such as the fiscal aftershock of the pandemic, can be planned for well in advance and costs absorbed through higher productivity.  

Despite the challenges, many emerging market business leaders can emerge nimbler from the pandemic into an environment brimming with opportunity. 

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