Page 16 - ELG2404 April Issue 489

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SPECIAL SUPPLEMENT

The economic crystal ball

Predicting the future of the foreign student market…

redicting the future of markets has Since 1998, when UNESCO started to with incomes equivalent to the global middle
often been a mug’s game. So, when record global figures, the number of students class. Real GDP growth combined with an
a recent British Council press release studying at universities overseas has grown, increase in the middle and higher income
Psuggested that growth in the number on average, by 5.4% a year, while GDP has families, is one key indicator of the potential
of international students heading abroad for grown, by 3.5%. Simply focusing on GDP for an increase in the number of students
university would slow over the next decade, leads to an over-emphasis on advanced going abroad.
we wondered if this could possibly be true. economies like the US and Germany, where This is true even where population
According to the British Council: ‘The most there is sufficient provision of excellent growth is declining. In China, birth rates are
significant slowdown in growth rate terms universities and, at least in Germany, a falling plummeting, but going forward, growth in
is anticipated in China, with noteworthy number of citizens of university age. family incomes will continue. By 2030, 66
slowdowns also expected in other key outbound US students, for example, make up just million more Chinese families will join the
markets including India, Vietnam, Nigeria 1.7% of those going abroad to study while global middle class. By contrast, only another
and Indonesia. Only Brazil and Pakistan are the US economy accounts for 25% of global eight million US families and just four million
projected to see an increase in the pace of GDP. By contrast, India makes up just 3.1% of Indonesian families are likely to do so.
growth in the 2019-30 period.’ the global economy but provides 8.1% of all The second key macroeconomic factor is
How could they possibly know? international students. exchange rates. This is not news; we have
Because, as the researchers from Oxford Demographics are, of course, a key factor; long known that a higher exchange rate
Economics found, the historic growth in countries with huge populations and high in one country, such as the US, will push
the flows of students since 1998 is highly birthrates, like India, may have a relatively low students into applying for courses in another
correlated to the growth in GDP. GDP, meaning that only a small percentage one, historically Canada, instead.
In the 30 markets which Oxford Economics of the population are rich enough to consider However, what if the currency of a
examined, GDP growth in any individual sending their children to university overseas. particular source country falls against those of
country was closely correlated with the However just 1% of a population nearing 1.5 all the provider countries? Oxford Economics
number of its students who go abroad. billion still gives you a market of 15 million. has been able to weigh the currency exchange
Countries which have seen the fastest Besides demographics, two other rate of each of the 30 markets against a
economic growth, such as China, India and macroeconomic factors also need to be taken basket of currencies covering all the provider
Vietnam have seen matching growth in the into account… countries. Their analysis shows that exchange
outbound student number while countries rates play a vital role, particularly in price-
with slower economic growth such as Japan, Macroeconomic indicators sensitive countries like Nigeria and Nepal.
Spain and Canada have seen low growth in The first key macroeconomic indicator of Indeed, they suggest that although ‘GDP
their outbound student markets. potential growth in the size of a source market and household incomes are more useful as
However GDP growth alone does not is a growth in household income; more medium-term predictors, exchange rates have
explain everything specifically, growth in the number of families more immediate impacts’.
16 April 2024