I should start this article off by clarifying there’s no such thing as a truly recession proof country. This should be obvious. Every investment has its risks. Anywhere can plunge into a recession with little notice.
With that said, a few places have managed to avoid recession for over two decades. Many of them are in Asia and are frontier markets – countries less affected by global economic crises.
They were able to skip the Asian Financial Crisis, the tech bubble of the early 2000s, and the more recent Global Recession of 2008. This was while achieving growth of over 6%.
None of that means these places will continue to dodge recessions in the future. After all, past performance doesn’t guarantee future results.
But here are three nations which have a great track record of being recession proof. You might want to consider investing in them to diversify your portfolio. Relying on the growth of just a select few countries is never good.
Mongolia is very large in terms of land size. But it also has the lowest population density on the planet with just over 1.5 million inhabitants. It’s rich in raw materials such as copper, coal, and, tin and tungsten.
Perhaps more notable is that Mongolia shares its southern border with China. China is beginning to deplete its own natural resources – so it’s now heading for Mongolia’s.
Chinese investment is now surging into its smaller neighbor, in some ways overwhelming it with foreign capital. The result has been GDP growth in excess of 7% over the past five years. Owners of everything from stocks, to businesses, to property in Mongolia have benefited.
Like most other frontier markets, Mongolia also has a track record of skipping recessions. It’s only had one year of recession over the past two decades. This was in 2009 when the Mongolian economy contracted by 1.3%, and it quickly recovered by 6.4% in 2010.
But Mongolia has started to slow down recently. Will it continue to grow in the future? The answer mostly depends on China and its demand for raw materials.
Kazakhstan is an obscure nation (even compared to other frontier markets) in Central Asia. However, it’s arguably done better than anywhere in the former Soviet Union. Kazakhstan’s GDP per capita is even higher than Russia’s.
Its economy, like Mongolia’s, only had a single year of recession for the past twenty. Kazakhstan’s growth skyrocketed in the late 1990s as the nation began to capitalize on its vast oil deposits. It never really slowed down.
More than any other place on this list, Kazakhstan will benefit from China’s New Silk Road. The initiative aims to finance and build infrastructure across dozens of countries in Eurasia. The end result? A modern reconstruction of China’s historic Silk Road.
The fact that Kazakhstan borders with Russia and the Caspian Sea – two of China’s easiest routes to Europe – means that there should be a lot of business between the two in the future.
Foreign property ownership laws are stricter in Kazakhstan than other places on this list. Only resident foreigners may buy real estate in Kazakhstan. That won’t stop you from forming a company or buying stocks, but you might want to look elsewhere if you’re a property investor.
Cambodia’s GDP growth between 1997 and 2014 compared to the United States’.
Most people think of genocide and Pol Pot when the word “Cambodia” comes to mind. However, it’s been on an upward trajectory since the mid-1990s. The nation’s best days are certainly ahead of it.
Cambodia is one of our favorite places to invest today. Its economy has averaged growth of over 7% for the past decade, making it one of the world’s ten fastest.
Not only that, but Cambodia has proven itself very resilient against global recessions. It hasn’t had negative GDP growth since the Khmer Rouge was dissolved in 1997.
Skyscrapers are now rising in the capital of Phnom Penh while the Cambodian economy continues to climb by over 7% per year. People who have been in Southeast Asia for a while say everything looks similar to Thailand in the 1980s.
They’re right, and in 20 more years Cambodia will develop itself to become an emerging market like Thailand.
How do I know? Cambodia has something that few other frontier markets do: a tourism sector. With attractions like Angkor Wat, the largest religious structure in the world, Cambodia draws millions of visitors per year.
This helps bring in the foreign capital which frontier markets need to grow. It’s not based on the price of oil, coal, or any other raw material either. Cambodia will be part of a well-established tourism trail in Southeast Asia for as long as Angkor Wat exists.
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