The Ten Top Financing Markets for P3 Opportunities

Public Private Partnership (P3) begins with fundamental analysis of economies. The ability to grasp opportunity depends on approach indicative of market sentiment. The first step in navigating P3 approach is defining market. Market begins with an analysis of Gross Domestic Product (GDP). A market that is in growth, stagnation or constriction will determine a large part of a P3 Manager's financing approach.

Key players tend to remain almost the same. The analysis conducted by Knight Advisory & Planning (KAP) demonstrates the following twenty (20) economies are the engine of growth. The top twenty (20) command the majority of Gross Domestic Product (GDP).

The nominal GDP of the top 10 economies aggregate near two thirds (or 67%) of the world’s economy. Interesting enough the top twenty economies contribute over four fifths (at a staggering 81%).

The remaining 173 countries together constitute less than one-fifth to the world’s economy.

Note: This list is based on the IMF’s World Economic Outlook Database, April 2018.

Nominal GDP = gross domestic product, current prices, U.S. dollars GDP based on PPP = gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP, current international dollar)Gross domestic product per capita, current prices, U.S. dollars

Approaching these facts it is easy to understand why anyone coming from the following twenty countries can work out advantageous P3 opportunities in a total of 173 countries. Here are the top twenty (20) you should be looking towards as your financial source.

1. The United States GDP

US Nominal GDP: $19.39 trillion US GDP (PPP): $19.39 trillion

The U.S. has retained its position of being the world’s largest economy since 1871. The size of the U.S. economy was at $19.39 trillion in 2017 in nominal terms and is expected to reach $20.41 trillion in 2018. The U.S. is recognized as an economic superpower. The identification comes from the economy constituting nearly a quarter of the global economy. The U.S. is backed by advanced infrastructure, technology, and abundance of natural resources. A compelling fact about the U.S. is the service-oriented economy. The U.S. service-oriented economy contributes almost 80% its GDP. The manufacturing portion contributes around 15% of the GDP. Agriculture is politicized into subsidies. It is estimated that if agriculture was commercialized in the United States food prices would soar to astronomical levels.

When the economies factor purchasing power parity, the U.S. loses its top spot. China overtakes the U.S. when purchasing power parity (PPP) is a measure. In 2017, the U.S. economy PPP was $19.39 trillion while Chinese economy PPP measured $23.16 trillion. The nominal GDP gap between the two economies is expected to lessen by 2023. The U.S. economy is projected to grow to $24.53 trillion by 2023. China is expected to grow to $21.57 trillion.

2. China GDP

China Nominal GDP: $12.01 trillion China GDP (PPP): $23.15 trillion

China experienced exponential growth over past decades. China broke barriers of a centrally planned, closed economy to evolve. Today China is a manufacturing and exporting hub of the world. China is known as the "world’s factory". China has huge manufacturing and export bases. The role of services has gradually increased in the past decade. Manufacturing as a contributor to GDP has declined relatively.

In 1980, China was the seventh-largest economy. In 1980 China produced a GDP of $305.35 billion. In 1980 the size of the U.S. GDP was $2.86 trillion. Since Chinese market reforms in 1978, the Asian giant's economic growth averaged 10% annually.

In recent years, the pace of growth has slowed. China with the growth reductions remains high in comparison to its peer nations. The World Bank reported a spurt in China’s economic growth in 2017 for the first time since 2010. The primary reason is a cyclical rebound in global trade. The growth is expected to sober down to around 5.5% by 2023. The size of the Chinese and the U.S. economy has been shrinking rapidly. In 2017, the Chinese GDP in nominal terms stood at $12.01 trillion. The Chinese GDP was only lower than the U.S. by $7.37 trillion. In 2018, the gap reduced to $6.32 trillion. By 2023 the difference is anticipated to be $2.96 trillion. China is the largest economy with a GDP (PPP) of $23.15 trillion. By 2023, China GDP (PPP) would be $37.06 trillion. China’s huge population brings down its GDP per capita to $8,643.11 (seventy-second position).

3. Japan GDP

Japan Nominal GDP: $4.87 trillion Japan GDP (PPP): $5.42 trillion

Japan is the third-largest economy in the world. Japan in 2017 reported a GDP of $4.87 trillion. The economy is crossed the $5 trillion mark in 2018. The financial crisis of 2008 rocked the Japanese economy. Japan has faced a challenging time for its economy since 2008. The global crisis triggered a recession. The recession lead to weak domestic demand and huge public debt. As recovery for the economy began its recover, a massive earthquake hit the country. The effects of the earthquake were social and economic. Japan's economy broke the deflationary spiral but meaningful economic growth remains elusive.

The 2020 Olympics will keep the investment flow strong and an easy monetary policy by the Bank of Japan should sustain. The nominal GDP of Japan is $4.87 trillion which is expected to move past $5.16 trillion in 2019. Japan slips to the fourth spot when GDP is measured in terms of PPP; GDP (PPP) was $5.42 billion in 2017 while its GDP per capita was $38,439.52 (25th spot).

4. Germany GDP

Germany Nominal GDP: $3.68 trillion Germany GDP (PPP): $4.17 trillion

Germany is not just Europe’s largest economy but also the strongest. On the global scale, Germany is the fourth-largest economy in terms of nominal GDP. Germany has a $3.68 trillion GDP. The size of its GDP in terms of purchasing power parity is $4.17 trillion. Germany's GDP per capita is $44,549.69 (17th place). Germany was the third-largest economy in nominal terms in 1980 with a GDP of $850.47 billion.

Germany is dependent upon capital good exports. Germany suffered a setback after the financial crisis of 2008. The economy grew by 1.9% and 2.5% in 2016 and 2017 respectively. The IMF reduced growth expectations to 2.2% and 2.1% respectively for 2019 and 2020. The growth reductions derive from rising protectionism and Brexit. To revise its manufacturing strength, Germany has launched Industrie 4.0 — its strategic initiative to establish the country as a lead market and provider of advanced manufacturing solutions. Germany's focus on manufacturing makes it a good location for P3 defense contractors looking for funding to build vehicles, munitions, air craft or boats for government entities.

5. United Kingdom GDP

UK Nominal GDP: $2.62 trillion UK GDP (PPP): $2.91 trillion

The United Kingdom has a $2.62 trillion GDP. The UK is the fifth-largest economy in the world. When compared in terms of GDP purchasing-power-parity, UK slips to the ninth spot with a GDP-PPP. The UK's GDP-PPP is $2.91 trillion. The UK ranks 23rd in terms of GDP per capita which is $39,734.59. Its nominal GDP is estimated to pass $2.96 trillion during 2019. UK GDP ranking is expected to place seventh by 2023 with a GDP of $3.47 trillion.

From 1992 until 2008, the UK economy grew each quarter. The reduction of its output for consecutive five quarters started April 2008. The economy shrunk by 6% during these five quarters (between the first quarter of 2008 and the second quarter of 2009). The UK eventually took five years to grow back to the pre-recession levels. This statistical data was published according to data from the Office of National Statistics.

The economy of the UK is primarily driven by the services sector. Services sector contributes more than 75% of GDP. Manufacturing is the second prominent segment and agriculture is third. Agriculture is not a major contributor to the UK GDP but 60% of the U.K.’s food needs are produced domestically. This is a very big statistic for stability. The Agriculture sector contributes to less than 2% of its labor force.

6. India GDP

India Nominal GDP: $2.61 trillion India GDP (PPP): $9.45 trillion

India is the fastest-growing trillion-dollar economy in the world. India is the sixth-largest with a nominal GDP of $2.61 trillion. India is poised to become the fifth-largest economy overtaking the United Kingdom by 2019 as per the IMF projection.

India ranks third when GDP is compared in terms of purchasing power parity at $9.45 trillion. When it comes to calculating GDP per capita, India’s high population drags its nominal GDP per capita down to $1,982. The Indian economy was just $189.438 billion in 1980, ranking 13th on the list globally. India’s growth rate is expected to rise from 6.7% in 2017 to 7.3% in 2018 and 7.5% in 2019. The currency exchange initiative and the introduction of the goods and services tax fade are resulting in less exponential growth according to IMF.

India’s post-independence journey began as an agrarian nation. The manufacturing and services sector has emerged strongly over the past twenty years. Today, India's service sector is the fastest-growing sector in the world. Service sector contributes to more than 60% to India's economy. An astounding 28% of employment is found in services for India. Manufacturing remains a crucial sector. The government initiatives such as “Make in India” illustrate the importance of manufacturing in India. India's agricultural sector has declined to around 17% of its GDP. India is much higher in comparison to the western nations. The economy’s strength lies in a limited dependence on exports, high saving rates, favorable demographics, and a rising middle class. India's aggressive growth makes it a risky investment entity in the areas of artificial intelligence, technology and infrastructure improvement. P3 entities with unproven technologies are likely to find a funding home in India.

7. France GDP

France Nominal GDP: $2.58 trillion France GDP (PPP): $2.83 trillion

France is the most-visited country in the world. France is the third-largest economy of Europe. France is the seventh-largest nominal GDP producer in the world. France has a nominal GDP of $2.58 trillion. Its GDP in terms of purchasing power parity is around $2.83 trillion. The country offers a high standard of living to its people. France's GDP per capita of $44,549 affirms this statement. In recent years, the economic growth has slowed. Unemployment has placed immense pressure on the government to reboot the economy. The World Bank has recorded unemployment rates at 10% during 2014, 2015 and 2016. During 2017, it declined to 9.681%.

Tourism remains very important to France's economy. France is also a leading agricultural producer. France's agriculture accounts for about one-third of all agricultural land within the European Union. France is the world’s sixth-largest agricultural producer. France is also the second-largest agricultural exporter, after the United States. The manufacturing sector is majorly dominated by the chemical industry, automotive and armament industry. The economy has grown by 2.3% during 2017 and is expected to grow at 1.8% and 1.7% during 2019 and 2020 as per data derived from IMF.

8. Brazil GDP

Brazil Nominal GDP: $2.05 trillion Brazil GDP (PPP): $3.24 trillion

Brazil is the largest and most populous nation in Latin America. With a nominal GDP of $2.05 trillion, Brazil is the eighth-largest economy in the world. The nation was riding the commodity wave and suffered multiple setbacks with the end of the commodity supercycle. Internal problems of corruption and political uncertainty dampened investment. Business environment remains friendly but unstable.

During the period 2006-10, the nation grew at an average 4.5%, moderating to around 2.8% around 2011-13. By the year 2014, Brazil barely grew at 0.1%. In 2016, Brazil contracted by 3.5% before rebounding by 1% in 2017. IMF projects the economy the economic growth to revive to 2.5% by 2019. Brazil is a part of the BRICS along with Russia, India, China, and South Africa. The country has a GDP (PPP) of $3.24 trillion and a GDP per capita of $9,681. As a result of commodity cycles Brazilian institutions are looking for diversification in state sponsored contracts. Offtake agreements often come with guaranteed purchase deals and can solicit solid international investment.

9. Italy GDP

Italy Nominal GDP: $1.93 trillion Italy GDP (PPP): $2.31 trillion

With a nominal GDP of $1.93 trillion, Italy is the world’s ninth-largest economy. Its economy is expected to expand to $2.5 trillion by 2023. In terms of GDP (PPP), its economy is worth $2.31 trillion. India has a per capita GDP of $31,984. Italy—a prominent member of the Eurozone has been facing deep political and economic chaos. Its unemployment rate continues to be in double-digits. Public debt remains sticky at around 132% of GDP.

On the positive side, exports and business investment are driving economic recovery. The economy clocked 0.9% and 1.5% in 2016 and 2017 respectively. It is projected to edge down to 1.2% in 2018 and 1.0% in 2019. Italian banks are seen as aggressive and often speculate. This open attitude allows good opportunity for transaction banks to supply letters of credit or bank guarantees to facilitate Mezzanine P3 Funding.

10. Canada GDP

Canada Nominal GDP: $1.65 trillion Canada GDP (PPP): $1.76 trillion

Canada displaced Russia to take the 10th spot in 2015. Canada retains its 10th position through 2019. Canada's nominal GDP is currently at $1.65 trillion. Canada exceeded the $1.7 trillion mark in 2018. Canada is forecast to exceed $2.43 trillion by 2023. Canada's per capita GDP of $45,077 is ranked 20th globally while its GDP of $1.76 trillion in terms of PPP pulls it down to the 17th spot.

The country has contained its level of unemployment and is likely to further shrink. While services are the major sector, manufacturing is the cornerstone of the Canadian economy. 68% of Canada's exports constitute merchandise exports. Canada has emphasis on manufacturing which is crucial to its future economic growth. Canada registered a growth of 3% in 2017 vis-à-vis 1.4% in 2016 and is expected to grow at 2% during 2019. Canada has diverse options for funding opportunities in the P3 sectors of: energy, robotics, technology and defense.

PROPER FORMAT PROPER FUNDING

Proper format and structure is the key to unlocking your liquidity. Project Principals should take care to assess requirements of funding prior to undertaking a project. Knight Advisory & Planning takes careful time to advise you through the structuring of your P3 Project. Take the time to have a free consultation so you can better understand your options. Regardless of your project condition or phase allow us to offer a free case study. Get started today by submitting your application or contacting us!

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Knight Advisory & Planning (KAP) is the only company to primarily focus on Public Private Partnerships (P3) since 2006. KAP operations are spread across countries of the world to serve this need. KAP Network consists of core partners surrounded by interlocking networks of consultants and affiliates in key trading countries and disciplines. We maintain Master Project Manager (MPM) who are American Academy of Project Management (AAPM) certified and are experienced in the following industries: construction, development, finance, technology, FinTech, biotechnology, production, R&D, and manufacturing. With over twenty (20) years of experience let us guide you through the P3 process.