MINT: the new emerging market acronym

MINT: the new emerging market acronym

In 2001, Jim O’Neill coined the term “BRIC” (Brazil, Russia, India and China). As the BRICs may face economic slowdown questions arise over what emerging market group will replace them. Mr. O’Neill has the answer: the MINT countries – Mexico, Indonesia, Nigeria and Turkey.

Fidelity International came up with this term, but Mr. O’Neill has been making it more popular most recently through a four-part series on Radio Four. The problem with this acronym is that the MINT countries, like the BRICs, make a very heterogeneous group. These countries may deserve the label ’emerging’ but for very different reasons, and their emergence is by no means set in stone. 2014 will be a defining year for all of them.


Mexico has seen important reforms, most importantly the energy reform in December 2013. This will allow companies outside of Petroleos Mexicanos to participate in exploration and production activities, and direct private investment can get access to Mexico’s midstream and downstream. With a need for cheaper energy in Mexico this could boost productivity.

However, there is substantial political opposition as natural resources are considered a national treasure, not to be exploited by foreigners. In addition, Mexico does not have a strong record on transparency and anti-corruption. Foreign companies will only make large investments in Mexico’s shale and deepwater resources if they can trust that best practices are implemented and that there is legal certainty.

On the demand side, Mexico can now begin to compete with the world’s largest exporter, China, because Chinese exports are becoming more expensive due to efforts to boost quality, combined with a stronger currency. The proximity to America is an advantage and if American companies start to import more from Mexico, this will be great news for the country that lost out big time when China joined the WTO in 2001.

Still, crime and instability could hamper growth with over 60,000 people being killed in drug-related violence since 2006. Many of the drug cartels operate in the northern part of the country, which are the industrial areas and the drivers of the manufacturing-led economy.


Indonesia seems to have the greatest promise out of the MINT countries. Chinese investors prefer Indonesia to nine other countries, and it was ranked the eighth top investment destination in the world between 2010 and 2013. Indonesia was also seen as the least likely out of the MINTs to experience social unrest in 2014. The country has grown between 4.08% and 6.9% every quarter since 2007 and is the largest economy in Southeast Asia. It also has the fourth largest population in the world which is very young, and is the fastest urbanising society with a growing middle class.

However, there are many issues to deal with. Rapid urbanisation has caused concerns over the property market overheating. A failure to invest in infrastructure reflects the problems of decentralizing decision-making powers covering most of public spending. This is due to Indonesia’s history of over-reliance on commodity exports and having to give power to regions that have supplied the commodity wealth. 2014 will also see President Yudhoyono step down, with a number of candidates jockeying for the position.

The shift toward more nationalistic economic policies in recent years has also become a concern for investors. For example, mining companies are required to shift majority ownership to Indonesian hands in ten years and for them to process raw materials locally. There is no shortage of partnerships gone wrong – think of the controversies surrounding Nathaniel Rothschild and Bumi Plc. In addition, Indonesia is part of the ‘fragile five’, due to its large current account deficit combined with the US Federal Reserve’s tapering. Still, it ran a surprise trade surplus in November and inflation came in below expectations, which reflects the progress in the authorities’ struggle to rebalance the economy and keep it from overheating.

Nigeria was named ‘Africa’s hope’ in the Radio Four series due to it having a large, young population with increasing consumer spending power and entrepreneurship being part of the fabric of society. Donald Kaberuka, President of the African Development Bank Group (AfDB), says he is quite bullish about the Nigerian economy, which could grow as much as 7% in 2014.

There are, however, a number of political concerns. The al Qaeda-linked jihadist group Boko Haram may escalate their efforts when the primary election comes later this year and a general elections early next year. Elections provide the most direct link to outbreaks of political violence across Africa. There are also tensions within the ruling party, the People’s Democratic Party (PDP). Many were angered last year when president Goodluck Jonathan was chosen as the PDP’s presidential candidate for next year, going against the unwritten rule that the position should alternate between Christian and Muslim candidates.

Widespread power cuts, corruption, piracy, oil theft and kidnapping make Nigeria the least stable of the MINTs, being ranked as ‘very high risk’ for social unrest in 2014. Another pressing concern for investors is the deterioration of the fiscal position of the government due to the coming patronage pressures. There is a worry that the upcoming elections will resemble 2011, when a massive diversion of national resources depleted the ‘Excess Crude Account,’ which can still be accessed in an ad hoc way due to limited institutional protection.

Turkey has many advantages related to its position between the East and the West. The radio series claimed that the Silk Road is back, as Turkey transports central Asian oil and gas through pipelines and links the East and West through aviation. However, Turkey is also one of the ‘fragile five,’ taking advantage of the loose global monetary conditions of the past few years to increase borrowing and fund spending, with increasing worries over the property market overheating. While Indonesia runs a trade deficit of about 3.5% of GDP, Turkey’s is around 7.5%. This could prove to be unsustainable as the Fed increases tapering. Many of the loans also need to be paid back in dollars and if the local currency weakens this is going to become very expensive.

The fact that Turkey is facing a political crisis certainly does not help. A corruption scandal has rocked Prime Minister Erdoğan’s administration as well as the protests in Taksim Square. There have also been further questions about political stability with a feud opening up in the governing AK party between supporters of the prime minister and an exiled Islamic scholar, Fethullah Gülen. Lack of political stability will make it more difficult to push through greatly needed reforms and is likely to make future growth weaker and more volatile.

Categories: Economics, International

About Author