Emerging markets will grow

The middle classes are growing in size and purchasing power in emerging markets like China, Brazil, and India. As a result, emerging countries will remain the best growth opportunity for German exporters, even as Germany continues to export successfully to relatively saturated markets in developed countries, especially within Europe.

Germany's fundamentals include an innovative business culture, skilled workforce, and high levels of investment in research and development. That's why Germany will remain well placed to supply the world with high-tech and medium-tech goods such as machine tools, software, and renewable energy systems, as well as high-quality consumer goods.

With emerging markets like China making major R&D investments in an attempt to scale the value chain in the high-tech sector, it's important for developed economies to invest in innovation to remain competitive. That's why the fact that Germany has one of the highest levels of R&D spending in the OECD (at 3 percent of GDP) bodes well for its future.

That's the gist of a new HSBC Global Connections country report on Germany's prospects looking forward toward 2030. The report is a joint product of HSBC Trinkaus & Burkhardt, the oldest private bank in Germany with roots going back to 1785, and Oxford Economics, which specializes in economic modeling.

Martin Vetter-Diez, a Managing Director at HSBC Trinkaus & Burkhardt, told Deutsche Welle that emerging-market populations see the level of consumerism in the US and Europe on TV shows and Internet sites, and consequently aspire to matching it. With better education and infrastructure, and growing populations, emerging markets are well placed to experience continued growth for decades to come.

There may be temporary setbacks from time to time in various regions -- at the moment, for example, investment capital outflows and weak currencies are hampering some emerging markets' ability to import German goods. But their long-term growth trend is nigh unstoppable.

Emerging markets will therefore grow in importance to German suppliers, but there are challenges in doing business in them. These include currency volatility and, in some cases, regulatory barriers.