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Index suggests growth, but volatility

January 19 - According to the 2016 Agility Emerging Markets Logistics Index, supply chain executives expect an uptick in emerging markets growth in 2016, despite concerns about China and the fluctuating oil price.

After a year of turbulence, 61 percent of logistics industry executives surveyed said that they are unclear on the direction of the global economy or expect more volatility in 2016. In spite of this caution, 59.4 percent said that the IMF forecast of 4.7 percent growth in emerging markets is "about right". 2015 saw emerging markets grow an estimated 3.6 percent, down from 4.5 percent in 2014.

For the first time, the 1,100 supply chain professionals that were surveyed see India, rather than China, as the emerging market with the most growth potential. In the overall index rankings - which are based on economic and social data - India climbed two spots to third place, behind only China and the UAE.

China remains the leading emerging market by a large margin. The UAE, India and Malaysia (nos. 2, 3 and 4) climbed higher than the commodity-dependent economies of Saudi Arabia, Brazil and Indonesia (nos. 5, 6 and 7). Mexico stood at no. 8, while Russia and Turkey took nos. 9 and 10.

Nigeria (no. 17) and Egypt (no. 22) climbed ten spots in the data-driven portion of the index - the biggest gains by any country in seven years of rankings. The potential of Nigeria, Africa's largest economy, has come into sharper focus since the government updated the methods it uses to track economic performance; while Egypt's economy and business climate have stabilised under its military government.   

The most business friendly conditions were found in the UAE, Qatar and Oman; while the UAE, Malaysia, China and Chile lead the tables in "connectivity", meaning that they have the best infrastructure and transport links, along with the most efficient Customs and border administration.

Countries in Latin America are losing ground to other emerging markets as a result of the recession and political turmoil in Brazil, and depressed prices for commodity exports.

Of the ten countries that slipped furthest in the index, six are in Latin America: Peru, Argentina, Uruguay, Brazil, Colombia and Venezuela. Even so, Chile continues to be the top-ranked emerging market with a GDP under USD300 million.

Russia, hurt by Western sanctions and isolated economically since the situation in Ukraine and its military intervention in Syria, fell from no.7 to no.9 in the index. Ukraine also fell four spots in the index.

The index also found that industry executives view oil prices and China's economy as the leading risks to the global economy in 2016. Meanwhile, logistics executives see 'economic shock' as the top risk in Asia Pacific - a sign of concern that a slowdown in China could ripple through economies and supply chains elsewhere in the region. 38 percent said they were reassessing their China strategies.

For the first time, logistics professionals see consumer spending in Africa as a more important driver of growth than energy and minerals. Respondents identified Nigeria, South Africa, Ghana and Kenya as Africa's most promising markets. In spite of recent growth and investment, Sub-Saharan Africa remains a frontier market for most supply chain executives: only 21.2 percent said they have operations there.

The logistics industry is also intrigued by the possibility that Iran could emerge from its long economic isolation as the result of an agreement to curtail its nuclear programme. In the survey, Iran moved up 12 spots - from no. 27 to no. 15.

"It was a volatile year for emerging markets, and you see that in the index. Eight of the top ten emerging markets shifted places," said Essa Al-Saleh, president and ceo of Agility Global Integrated Logistics.

"Despite the turbulence, the fundamentals driving growth remain consistent - a rising middle class with spending power, progress in poverty reduction, growing populations. That's why we are still positive on the outlook for emerging markets and see them driving global growth."

Transport Intelligence (Ti)
compiled the 2016 Agility Emerging Markets Logistics Index, which you can see here: www.agility.com/2016index

"The world's economy is still riven by instability, and emerging markets such as China and Brazil have not been immune," said Ti chief executive John Manners-Bell. "However others, such as Mexico, are in a far stronger position and will benefit from the economic growth experienced in the USA and Europe. More than ever, investors in emerging markets need to be discerning and the results of our index are critical to providing clarity in a confusing and complex world."

www.agility.com

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