Emerging Markets Are Gaining traction
July 17, 2014 - SCMR Editorial
Over the past five years emerging markets have maintained their “growth dynamic,” observes John Manners-Bell, CEO, of the London-based think tank, Transport Intelligence (Ti). At the same time, however, none of the upstarts have remained immune from profound economic and political upheavals. Furthermore, the euro zone crisis and political gridlock in the U.S. make it more difficult for aspirational nations to realize their destinies.
“Yet it is extraordinary that emerging markets have continued to grow so robustly,” notes Manners-Bell.
Indeed, Ti is forecasting expansion at 6% in the next 5 years – far out-stripping progress in the developed world. It is for this reason, say Ti analysts, that emerging markets remain so relevant to the global economy…and more specifically to the global logistics industry
The Agility Emerging Markets Logistics Index contains some other revealing trends based on a recent survey, says Essa A Saleh, CEO & President Global Integrated Logistics, Agility.
“In 2013, slowing growth in China, India, Brazil and other emerging economies prompted a reappraisal of their prospects and potential,” he says. “Many countries in the Index are at a crossroads, facing difficult policy choices. Others are threatened by unrest or intractable social problems.”
Among the major conclusions drawn from this survey are that logistics and trade professionals remain overwhelmingly upbeat about prospects for emerging markets in 2014 but are a bit more guarded than
they were a year ago. Of the more than 800 shippers interviewed, nearly 74% said prospects for emerging markets were either “very good” or “good,” as compared with 75% in 2013. But the percentage seeing emerging markets’ prospects as “very good” fell from roughly 22% to about 17%.
Not surprisingly, the Asia Pacific enjoys the brightest outlook. Nearly 58% believe emerging markets in region will grow fastest in 2014. Latin American markets were the choice for roughly 25% of respondents.
“Respondents continue to see the greatest potential for growth in non-Asian emerging markets in extractive industries – mining, minerals, gas and oil” says Ti analyst, Cathy Roberson. “In Asia Pacific, where China in particular is trying to develop a more balanced economy powered by both exports and consumption, retail and consumer goods were identified as having the greatest potential.”
An overwhelming percentage – more than 63% – “agree” or “agree strongly” that manufacturing production will move away from China to other emerging markets countries. Vietnam, India, Mexico and Indonesia were seen as the top alternative destinations.
“Growth, trade volume and investment are far more important than security and lack of corruption when it comes to factors driving the emergence of an economy,” adds Roberson.
Survey respondents believe supply chain risks vary by region. In Asia Pacific, the top risks identified were natural disasters and economic shocks. In Latin America, corruption and poor infrastructure were the leading risks. Government instability and terrorism were top concerns for the Middle East and North Africa. In Sub-Saharan Africa, poor infrastructure and government instability were seen as the greatest risks.
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