Freight News, Logistics

India advances as China pegged back

[ January 18, 2016   //   ]

India could have overtaken China as the country with the most growth potential, according to the latest issue of the Emerging Markets Logistics Index published by freight forwarder Agility on 18 January.
For the first time, supply chain professionals surveyed see India – rather than China – as the emerging market with the most growth potential. And in the overall Index rankings, which are based on current economic and social data, India climbed two spots to No. 3, behind only China and United Arab Emirates (UAE), thanks to its strong economic performance and early reforms by the government of Prime Minister Narendra Modi.
Nevertheless, China remains the world’s second-largest economy and the leading emerging market by a large margin. Other countries at the top of the Index rankings include the UAE and Malaysia (4), which leaped over the commodity-dependent economies of Saudi Arabia (5), Brazil (6) and Indonesia (7). Others in the top 10 were Mexico (8), Russia (9) and Turkey (10).
Introducing the new index at a press conference, Agility president and chief executive Essa Al-Saleh said it was significant that the UAE had just announced that it had exported its last barrel of oil, marking its move away from being an economy based on oil to one dependent of manufacturing and services. Although the UAE’s economy is a tiny fraction of China (and India’s) it tends to score highly in the index because of its sxtrong infrastructure and ease of doing business. (some though would argue that it should no longer be classified as an emerging market; it’s infrastructure in many respects is far superior to most of that found in Europe or North America.)
Overall, the 1,200 supply chain executives who took part in the survey – carried out by transport consultatns Ti – expect an uptick in emerging markets growth in 2016, despite the concerns about further slowing in China, fluctuations in oil prices, and possibie weakness in the US economy.
Most logistics industry executives said they were unclear on the direction of the global economy or expect more volatility in 2016. Emerging markets grew an estimated 3.6 % to 4.2% in 2015, down from 4.5% in 2014.
While Nigeria (No. 17) and Egypt (No. 22) climbed 10 spots in the data-driven portion of the Index, the biggest gains by any country in seven years of ranking, subsaharan Africa in particular is seen in the logistics industry as “frontier territory” where only the bold may venture.
The Gulf states – UAE, Qatar and Oman – have the best business climates – a combination of market access and risk, regulation, foreign investment, urbanisation and wealth distribution. Other Gulf states also rank near the top in business conditions: Saudi Arabia (No. 5), Kuwait (9) and Bahrain (11).  
UAE, Malaysia, China, Chile lead in “connectivity,” meaning they have the best infrastructure and transport links, along with the most efficient customs and border administration.
Latin America though is losing ground to other emerging markets as a result of recession and political turmoil in Brazil, the region’s biggest economy, and depressed prices for commodity exports.
Russia has been hurt by Western sanctions and isolated economically since the Ukraine crisis and its military intervention in Syria.
Ti chief executive, John Manners-Bell, said that while the top three markets for investment by the industry remained unchanged – China, India and Brazil – India had been closing the gap with China. At the same time, some smaller niche investment markets had emerged, notably Iran which has just been released from international trade sanctions folloiwng the signing of a its nuclear weapons deal. Kuwait, which had been privatising state assets, was another market of interest, while Malaysia had also transformed itself into a more diverse economy, said John Manners-Bell.
Turkey’s investment standing had declined as it had been hit by worries over economic growth and security.

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