Growth Promise Indicators | KPMG | BE
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Growth Promise Indicators 2018

Growth Promise Indicators 2018

Growth Promise Indicators 2018

KPMG: "Investing in technological infrastructure and efficient institutions is the key to economic prosperity"

During the World Economic Forum in Davos, KPMG launches the fifth edition of the Growth Promise Indicators (GPI). KPMG uses the GPI to evaluate the growth potential of 180 countries (and Hong Kong) by looking at five indicators: macroeconomic stability, openness and willingness to reform, infrastructure quality, human capital and institutional strength.

Geographic Distribution

  • West European countries rank at the top of the GPI list, with the Netherlands ranked first, Switzerland second, Luxembourg third and Norway fifth. The only non-European countries and jurisdictions in the list's top ten are Hong Kong (SAR), ranked fourth, and Singapore, ranked seventh. Despite Brexit, the United Kingdom holds steady in thirteenth place, right behind Canada, which climbed two places, thanks to institutional and infrastructure improvements.
  • It is worth noting that many of the larger global economies, including Germany (14), Japan (20), the United States (23), and France (24), find themselves excluded from the top ten.
  • The study examined data retrospectively over the past two decades. Every region experienced some improvement, with the exception of Africa. Eastern Europe, Asia and the Middle East showed the strongest development.

Some other conclusions:

  • The GPI shows that the majority of countries, insofar as international trade is concerned, are less open than they were ten years ago. Between 2002-2007, 132 countries became more open and 44 countries became less open. Between 2012-2017, 'only' 59 countries became more open; 116 countries regressed. This means that a globalization slowdown has come into effect, a slowdown initiated long before 2016, the year during which America elected a new president and the Brexit referendum passed.
  • According to the study, lower and middle-income countries tend to invest primarily in transportation infrastructure, which means they dedicate less investment into  innovative trends such as artificial intelligence and the Internet of things.
  • Efficient institutions, a well-functioning government, and high-quality regulations are crucial. Some of the lower-income countries, such as Rwanda or Bhutan, greatly improve their growth potential by taking steps in these areas.

Belgium ranks 16th

Our country comes in sixteenth, the same ranking as last year, with a score of 7.42/10. A strong position, but one that still allows for improvement, particularly if we compare it to that of neighboring countries such as the Netherlands and Luxembourg.

Koen Maerevoet, CEO of KPMG in Belgium:

"Our country comes in within the top 20 and holds its position: that is already very positive. We also score particularly well in human development (8.02) - thanks to our education and health care systems - and in the willingness and ability to implement reforms (9.35). Fiscal reforms contained in the summer agreement illustrate this last point nicely. But, with respect to macroeconomic stability, we score quite low (2.92). This is primarily due to our historical national debt, which is still valued at more than 100% of our GDP. The quality of our infrastructure (6.97) also needs to catch up to that of the Netherlands and Luxembourg. This holds challenges for the federal government, as well as for the states." 

We, as a country, face domestic and international challenges: 

"Foreign direct investment and international trade are lifelines for our country, which remains one of the most globalized economies in the world. The globalization slowdown, together with protectionist tendencies, serve as a wake-up call. At the diplomatic level and in the interests of our prosperity, our country needs to rally behind free trade", says Maerevoet.

Looking Ahead

As far as the future is concerned, KPMG points to the following potential themes in order to stimulate GPI performance globally and individual national prosperity over the next ten years:

  • Invest in technological infrastructure, including for lower-income countries.
  • Transparency in policy development: citizen involvement via online platforms must increase support.
  • A decade after the financial-economic crisis, debts and macro stability will continue to improve, and many countries will be in a better position to repair their budgets.

Koen Maerevoet, CEO of KPMG in Belgium, concludes: 

"The GPI report investigates how individual countries can grow sustainably and how they can maximize their potential. It shows that a number of countries can speed up their development by investing wisely in technology or infrastructure. But it is also crucially important for countries to invest in the right education and training in order to prepare the generations to come for the future. The business community also plays a central role here: we must invest in our people and support them as we enter the first days of the fourth industrial revolution."

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