By matthew Stinchcombe
The world’s financial and business centres are the face of global business and as a result they provide an overall picture to the development and stability of an economy and even a country. These financial centres are rapidly evolving and adapting in a world of economic instability. Here is my prediction of what some of the world’s top financial centres will look like in 10 years time.
London has remained top of the global financial centres index in 2013, which ranks financial centres on competitiveness. This potentially stands London in good stead when it comes to predicting its position amongst other international economies a decade down the line. London’s international status with the success of the 2012 Olympics, its rich cultural heritage and world famous skyline and architecture also insures future international business investment. London is also likely to remain a hub in terms of business in the UK with its population also set to rise to 8.6 million by 2022. The recent negotiations between the EU and US over a new bilateral trade agreement at the G8 summit in Northern Ireland also further cement London’s strong position.
Potential downsides that could inhibit growth for business in London include the lack of expandable space, particularly in central London as well as the current austerity measures affecting public spending, meaning any commercial developments are likely to be slow. It is unlikely there will be a great deal of change in London’s position amongst the world’s economies over the next 10 years other than sustaining itself.
One region that has gone through a period of rapid expansion and continues to grow steadily is Dubai, with the growth in 2013 set to be between 3-4% and the price of oil continuing to strengthen this region could really begin to compete with some of the more established economies in a decade’s time. Dubai is blessed with a favourable climate, comparatively cheap airfares from European countries and also balances tourism and business well together, providing leisure activities and shopping, as well as office space in the tallest building in the world. These factors also provide the lifestyle that attracts a skilled professional workforce. Dubai’s development has defied the odds so far and as long as the price of oil remains high, Dubai is only likely to expand in the next decade on this evidence.
Out of the many emerging markets Brazil seems to be the most interesting and unpredictable; particularly as it now has a larger economy than the UK. For that reason the Central Business District of Sao Paulo has the potential of a force to be reckoned with if growth continues at the rate it has in the last five years. Sao Paulo is the largest city in South America, a continent that has seen substantial growth and as the financial capital of Latin America it looks set to continue this growth. Sao Paulo has the potential to become an incredibly powerful financial and business centre for South America in its period of growth, yet there is also the chance that the infrastructure has not kept up and the problems with transportation may prove a downfall. Another factor that could potentially hold Sao Paulo back is the competition from Rio de Janeiro, a far more scenic and recognisable city and one that has the potential to draw people away from doing business in Sao Paulo itself. Security too remains an issue, with many Favelas so close to business districts this may put off those wishing to relocate their business.
Technological businesses continue to be at the forefront of emerging economies particularly in Asia. Seoul is South Korea’s business hub. They have the infrastructure, planning and available industries to compete and grow to become one of the world’s largest economies over the next decade. There are many reasons why Seoul will become a more important centre for business in a decade; firstly there is a comparatively cheap skilled workforce when compared to other areas associated with the technological industries, such as Silicon Valley in California. There is also a scheduled investment of 6 trillion Korean Won by 2020, which in turn is predicted to create over 105,000 jobs. This creates a competitive business environment and fuels economic advancement, factors important in creating a business and financial centre to compete with western countries.
As a gateway to one of the world’s most rapidly expanding economies, China, the Special Administrative Region of Hong Kong has great potential for growth and expansion. The transport system (In particular Hong Kong international airport), business infrastructure and free markets have led to Hong Kong being regarded as an economic force. The International Institute for management development (IMD) places Hong Kong third in the most competitive economies of the world. While this sounds good on paper they have lost their status as the top ranked country in recent years. It is likely that Hong Kong may fall further down this list in the coming decade unless they diversify away from the traditional economic pillars of finance, logistics and trade. More arbitrary factors may play a significant role in whether or not a business district continues to develop in a competitive field. In Hong Kong the air pollution is at such a dangerously high level that 3 out of four companies were finding it difficult to attract or retain employees. With Singapore offering similar economic strengths and a cleaner environment it is something that needs addressing for the development of Hong Kong’s Economy but it is likely that they will remain an economical force in the next decade.