You might be surprised that some countries completely skipped the 2008 Global Financial Crisis. It’s even more shocking that some places managed to avoid recession for over two decades.
A select few markets in emerging Asia have a strong track record of skipping recession. Not only did they skip the previous economic meltdown, but also the tech bubble of the early 2000s and even the 1997 Asian Financial Crisis.
Of course, a “recession-proof” economy doesn’t exist. Below are three places which are about as close as it gets though. Consider investing in them for maximum diversification.
Manufacturers are now leaving China as labor and upkeep costs start becoming too expensive. Vietnam, with minimal regulations and low prices, is emerging as a new favorite.
This trend will boost Vietnam’s economy well into the future. Samsung, Nike, and several others have already built large manufacturing plants in the country. More companies will surely follow in the coming years.
The next place on this list is a better choice for real estate investment. But stock investors will especially find Vietnam interesting. Hanoi and Ho Chi Minh City each have an exchange, totaling around 700 stocks.
Many of them are small-cap stocks which barely see analyst coverage. Because of this, the Vietnam stock market has tons of hidden gems with great valuations.
A graph showing Vietnam’s GDP growth since 1985 compared to the United States. We won’t clutter this article with graphs, but other places on this list similarly outperform western economies.
Cambodia had a rough few decades under the Khmer Rouge. But this small nation in the heart of Indochina put its dark past behind it and is now one of the fastest growing on the planet.
The Khmer Rouge obviously didn’t keep track of statistics like GDP. With that said, Cambodia averaged growth of over 7% since Pol Pot’s regime was dissolved in the 1990s. They’ve also skipped every recession since then.
Cambodia is probably the easiest place on this list to conduct business in. Foreigners can own 100% of a local business along with freehold property in their own name.
Furthermore, Cambodia uses the U.S. Dollar as its main currency. We aren’t exactly fans of the dollar, but compared to others in the region like the Vietnamese Dong and Malaysian Ringgit, it’s a big improvement which substantially limits currency risk.
This landlocked country shares borders with five other nations – namely China, Thailand, Cambodia, Vietnam, and Myanmar. That’s more than anywhere else in Southeast Asia.
As such, Laos is quickly turning into a logistics and transportation hub. China is naturally leading the Lao infrastructure boom. A high-speed rail line will connect Kunming with Bangkok, running through Laos on the way.
Investing in Laos isn’t easy for most people though. The country doesn’t have a stock exchange and foreign property ownership isn’t allowed either. Your only option is starting a Lao company, which is a bureaucratic headache.
How Do These Countries Avoid Recession?
You might have already noticed something each of the three places above share in common. Sure, they’re all located in Southeast Asia. More important is that they’re all frontier market economies too.
Frontier markets are a step below emerging markets in terms of development. However, they tend to avoid recession since they’re less exposed to the global market and its whims.
See, the global economy is now interconnected. Starbucks and IKEA are found almost anywhere in the world from China to Brazil. That means practically every country needs continued investment from these multinational firms to sustain their growth.
The problems arrive when a global recession hits and multinationals cut back their expansion. Without foreign investment, everyone else gets sucked into economic crises which originate in places like the United States, European Union, or China.
Frontier markets are often an exception. Laos and Cambodia don’t depend on investment from McDonald’s because they don’t even have McDonald’s yet. Of course, these nations will get a boost when large investors inevitably set up shop.
You should invest in frontier markets for these reasons. They don’t just have rapid growth potential, but also offer unparalleled diversification.
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