The booming markets of yesteryear aren't what they used to be. According to projections from the International Monetary Fund (IMF), emerging commodity-driven markets such as Brazil and Russia have fallen on hard times in early 2016 as global oil and iron ore prices have plummeted. Looking to Europe, there is a landscape of slow or no growth as those nations continue a gradual recovery from the global financial crisis. China may still be considered a member of the booming markets club, with a projected GDP growth rate of 6 percent in 2016, but its rate of growth is clearly decelerating as China's export-led growth strategy faces challenges at home and abroad.
The Economist projects a global GDP growth rate of 2.7 percent for 2016. The article goes on to explain that this moderate outlook reflects the fact that growth is still lackluster in Europe, Japan and emerging market economies as a whole. The IMF is equally tepid in its global growth forecasts, reporting that "in advanced economies, a modest and uneven recovery is expected. ... The picture for emerging-market and developing economies is diverse but, in many cases, challenging. The slowdown and rebalancing of the Chinese economy, lower commodity prices and strains in some large emerging-market economies will continue to weigh on growth prospects."
Where GDP Growth Is Booming
Although you should see relatively strong growth in North America and lukewarm growth in Europe and South America, the only booming markets will be in certain nations in Asia and Africa. The Economist predicts growth of about 7 percent in Asian countries such as Laos, Cambodia, Vietnam and India. Forecasters at The World Bank are particularly upbeat about India, explaining that the South Asian giant "has relatively little trade exposure to slowing demand in major emerging markets and is a net importer of oil and will benefit from lower global energy prices." It projects growth in India will near 8 percent.
The Economist's forecasters are also optimistic about GDP growth in Africa for 2016, projecting growth of around 7 percent for the Ivory Coast and Rwanda. With that said, these nations still face major problems in areas such as infrastructure, governmental transparency and a long history of political instability. Booming markets in Asia and Africa may present opportunities, but many present huge risks as well.
How to Adapt Your Global Talent Strategy to Booming Markets
Making strategic changes based on projected GDP growth in Asia or Africa is far from simple. Each market has unique opportunities and challenges that must be understood and planned for. In addition to local knowledge, you'll also need a deep understanding of your organization's strengths and how to leverage them in any booming market. For example, selling your goods and services in a non-booming market such as Canada may be easier than selling them in booming Cambodia because of geographic proximity, existing distributor/supplier relationships, a common language, the availability of local talent or even political considerations.
According to ADP's study The Evolution of Work: The Changing Nature of the Global Workforce, 97% of those surveyed think that organizations will search globally for the best talent. So as markets boom, of course, competition for talent in those booming markets inevitably heats up, which will complicate your organization's talent strategy. The scarcity of local talent can be a problem, and retaining local talent can be very challenging and expensive in a booming market. Meanwhile, sending expats to those markets can be equally problematic. Choosing whether to send expats or hire locally is a big question for HR leaders and their organizations. As consultant Larry Harding writes in his book "Winning Globally," "hiring local employees involves hiring people you and your management team don't know, employees who will be new to your business culture and operations, who could be thousands of miles away and likely in a time zone that makes real-time communication difficult." Because of this, it must be done with great care. However, in an article in Entrepreneur, Joel Koblentz cautions, "[A U.S. employee] may arrive with the best intentions but find out there are vast cultural differences. And even if they speak the language, they may not have spoken it in a business setting before." Local or, ideally, bicultural employees will have an advantage in this scenario.
While it may be fairly easy to determine which markets are booming in 2016, it's complicated to quickly shift your talent strategy to take advantage of those economic trends. Therefore, HR leadership should work across departments to ensure efforts are made to align organizational strengths with current global market growth and then use that intelligence to inform and enhance adjustments to your global human capital management strategy.