Reaching the global sweet spots

By Ranjit Thambyrajah

Everyone from the IMF down to the individual bank economist is telling us that 2023 will “feel like” a recession, but there will still be investors looking for sweet spots with safe returns; there will still be nations achieving above-par economic growth; and that means there are still many global-scale projects searching for safe, efficient and reliable funding.

The combination of cashed-up investors and economies growing above-par means governments in those ‘sweet spots’ will be looking for partners to help build their infrastructure, hospitals, schools and supplying food to their growing populations. It’s all a matter of knowing where to look for the opportunities and the funding.

The IMF is calling it a cost-of-living crisis. Its October 2022 World Economic Outlook (WEO) report says: “Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades… tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook”.

As usual, we need to look beyond the attention-grabbing executive summary to discover what is really going on at a regional level and across sectors. The IMF predicts that global growth is forecast to slow from 3.2 percent in 2022 and 2.7 percent in 2023.

The IMF says more than a third of the global economy will contract this year or next, while the three largest economies—the United States, the European Union, and China—will continue to stall.

On the upside, however, that means a bit less than two thirds of the global economy is expected to keep growing and emerging markets and developing economies are way out in front in terms of the IMF’s latest growth predictions for 2023.

The impacts of inflation have been less severe in developing economies than in the US and Europe and the IMF has warned those developing and emerging nations close to debt distress to hunker down, renegotiate their debt and store up some liquidity.

Again, that means there will be sovereigns looking for partners to keep their economies growing through investment in real and social infrastructure.

Research by KnightFrank shows the low levels of personal net wealth needed to make it into the wealthiest one percent of the population in some countries.

In India, the Philippines and Indonesia, for instance, the income threshold for making it into the top one percent of earners is as low as $60,000. In Vietnam you need to earn $160,000 to be in the top one percent of earners. Entry to Malaysia’s top one percent club takes $540,000; South Korea $1.2 million; Japan and Taiwan $1.5 million, Hong Kong $2.8 million and Singapore $2.9 million.

So statistics from the IMF indicate that it is these emerging and developing economies expected to retain respectable levels of economic growth through to 2024 and, yet, their pool of locally-available funds to invest is very shallow and they are being advised not to take on more debt.

Clearly they need private-sector partners to keep the wheels of economic growth turning.

That’s where Acuity Funding can help. Our Global Desk and status as a member of SWIFT means we have the network in place, to connect high-net-worth investors from family offices through to major hedge funds, with those needing funding for major projects, across developing economies and directly into the sweet spots for 2022-24.

Talk to us today about your funding needs.