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Channel NewsAsia takes a closer look at the economies of Nigeria and Turkey which, along with Mexico and Indonesia, are countries of the so-called "MINT" nations which some see as the world's new powerhouses.
SINGAPORE: Channel NewsAsia takes a closer look at the economies of Nigeria and Turkey which, along with Mexico and Indonesia, are countries of the so-called "MINT" nations which some see as the world's new powerhouses.
Each country not only has promise, but also pitfalls that could jeopardise their economic potential.
Nigeria -- the new frontier
In recent years, Nigeria has been the darling of frontier investors due to attractive yields and a steady currency.
Thanks in part to oil, it is the only MINT nation running a current account surplus -- US$5,016 million in the second quarter of 2013.
But the key to Nigeria’s economic potential is demographics.
The population is booming, with an average age of just 18. According to the World Bank, the population of Nigeria was 170 million in 2012.
"Nigeria is currently the 7th most populous country globally,” said Razia Khan, regional head of research for Africa at Standard Chartered.
“By 2035, it's likely to be fourth, only after India, China and the United States. And by 2055, Nigeria could be the third most populous country."
Incomes are also on the rise and in 2012, the average person earned US$1,440 a year, according to the World Bank.
“The working-age share of the population is going to be growing over time. Other things being equal, that means more consumption. That's not to downplay however, the structural reforms that are still needed for Nigeria to realize its growth potential,” said Ms Khan.
Some reforms have already started.
The country is opening itself to greater foreign investment and has eased restrictions on withdrawing money from the country.
But corruption remains a problem.
“If you look at how much oil has been produced since the 1960s, Nigeria should be in a much more powerful position than it is today. Even today there is very little to show in terms of the oil saving that's been accumulating over time,” said Ms Khan.
Nigerian entrepreneur Taopheek Babayeju points to other challenges.
“Access to funds is a major challenge to entrepreneurs, and also access to good infrastructure to things like power, which remains a challenge,” he said.
Most businesses have to generate their own power at their own cost.
Turkey -- the bridge between Europe and Asia
With a population of 74 million, Turkey is the smallest and the only non-commodity producer of the "MINT" nations.
It too has a young population with an average age of 29, according to the CIA Factbook.
Turkey’s strategic location -- between Europe and Asia -- has helped to nearly quadruple its GDP from US$230 billion in 2002 to about US$800 billion today.
“Over the past 10 years, yes, we've had steady economic growth. But really, we've had a series of crises where each time Turkey was somehow… able to pull itself back… from the brink and carry on,” said Jonathan Friedman, an analyst for Europe and Turkey at Control Risks.
It is again a critical time for Turkey as its large current account deficit -- 7.5% of GDP -- makes it among the most vulnerable to US tapering.
About four-fifths of Turkey's US$60 billion current account deficit is funded by short term capital inflows, and political instability is once again rocking the nation.
“Investors right now are becoming increasingly concerned by the political turmoil in the country. And if they keep withdrawing funds, then we're going to see increasing pressure on the Turkish lira,” said Mr Friedman.
“The Turkish lira was the worst performing currency over the past month compared to the USD. The Turkish stock market, the Istanbul stock exchange, was the worst performing stock exchange over the past month.
“In the long term, I'm a big believer in Turkey. In the short-term, there are a lot of concerns.”
These are all concerns that Turkey will have to overcome to unlock its potential growth.