In Search of the Next China: Evaluating the MINT Economies
NEW YORK (TheStreet) -- They grow up so quickly, don't they? The BRIC economies (that is, Brazil, Russia, India and China), coined as such by former Goldman Sachs economist Jim O'Neill, have become economic heavyweights in each corner of the globe. Now investors are turning their eyes to the next, hot emerging markets -- those that are relatively young, cheap enough to present a buying opportunity, and on the cusp of explosive growth.
O'Neill's next big bet? The MINT (Mexico, Indonesia, Nigeria, Turkey) economies. These, he argued, are the next emerging powerhouses.
But do these economies justify the hype?
According to IHS chief economist Nariman Behravesh, the answer, in short, is no."China really has broken all records in terms of how many decades it grew for 10%," he said in an interview with TheStreet. "I know very few countries that have come anywhere close to replicating that kind of performance." The one-of-a-kind growth China managed in the 2000s, he argued, was a product of sheer size, educational development, massive investments in infrastructure and, of course, favorable global conditions before the financial crisis at the decade's tail-end. This cocktail enabled China to decouple from the BRICs and rival the U.S.'s long-held economic supremacy. Consider just the first factor, then. China currently has a population of 1.37 billion. Even the largest of the MINT economies, Indonesia, has a fraction of that at 251.5 million people. However, the MINTs do have unique aspects that investors can take advantage of if they recognize the catalysts to explosive growth -- catalysts such as size, population growth and, most importantly, the ability to increase productivity. "Technology, education, political stability and sound macroeconomic fundamentals (e.g. inflation, low government debt) are key to increasing productivity," said Sarah Boumphrey, head of countries and consumers at Euromonitor. Currently, she said, the MINT economies have seen growth on par with 'BRI' (that is, Brazil, Russia and India). Indonesia and Nigeria, the fastest-growing MINTs with IMF estimates for 2014 GDP growth of 5.4% and 7.1%, respectively, can't match China's above-10% growth from 2003 to 2007. In a phone interview with TheStreet, Randy Warren, CIO of Warren Financial Service, remains positive on the MINTs, but noted three macroeconomic gateways to success: interest rates, a healthy demand for natural resources, and China expanding once again. "[China] will hang in there for the next few months (maybe the next six to nine months) then start to accelerate at which point these young, upstart economies could be hugely profitable bets," he predicted. "Unfortunately, these countries are going to be highly tied to interest rates and if rates are expected to rise here in the U.S., that's going to be tough sledding for these guys."
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