Sixth annual index of 45 emerging markets found slowing growth in China, India, Brazil and Russia was offset by growth in ASEAN, GCC, and Sub-Saharan Africa economies.
Growth in emerging markets is being driven by countries outside of the BRIC bloc of nations, according to the 2015 Agility Emerging Markets Logistics Index.
The index, released annually by the logistics company Agility, found that economic and trade growth will likely come from countries in the ASEAN, Gulf Cooperation Council, and Sub-Saharan Africa regions, as well as Indonesia, Nigeria, Bangladesh, Mexico and Pakistan. Growth from those markets, Agility said, “is offsetting mixed performance in the BRIC countries that powered emerging market growth in recent years.”
The BRIC nations are Brazil, Russia, India and China.
The index, now in its sixth year, measures 45 emerging economies on their size, business conditions, infrastructure “and other factors that make them attractive for investment by logistics companies, air cargo carriers, shipping lines, freight forwarders and distribution companies.”
The index includes a survey of 1,000 global logistics and supply chain executives about their perspectives on those markets.
Large BRIC nations Brazil, Russia, India, China and South Africa have traditionally accounted for much of the growth and investment in emerging markets, and have dominated the Index. But Saudi Arabia climbed to No. 2 in the 2015 index, ranking behind only China, which has 47 times the population and 12.5 times the economic output.
Next-tier economies Indonesia (No. 4 in the Index), Nigeria (27), Bangladesh (28) and Pakistan (25) – all with populations topping 100 million – climbed in the index rankings. The other large non-BRIC market – Mexico – held steady at No. 9.
Other Index findings:
- Gulf states United Arab Emirates, Qatar and Oman had the best “market compatibility” – the most ideal business conditions – among the 45 countries in the index, followed by Uruguay, Saudi Arabia and Morocco.
- UAE, Malaysia, China, Oman, Saudi Arabia and Chile led in “connectivity,” indicating they have the best infrastructure and transport links.
- Russia’s growing economic isolation has damaged its appeal to logistics and supply chain professionals. More than 75 percent of survey respondents said they were pessimistic about Russia’s prospects.
- India continues to divide logistics and supply chain executives. They ranked India as the No. 2 choice to emerge as a major logistics market and ranked it relatively high – No. 17 – among countries least likely to become a major logistics market.
The fastest-growing trade lanes linking emerging and developed markets were US-Vietnam (up 42.7 percent by volume) and Cambodia-EU (up 41.9 percent) for air cargo; and Ukraine-EU (up 35.8 percent) and EU-Egypt (up 23.2 percent) for ocean shipments.
“For 2015, trade flows between Asia’s emerging markets and other emerging markets are the ones that had logistics professionals most upbeat in the survey,” Agility said. “Survey respondents also identified risks to growth by region and provided views on near-sourcing, e-commerce and other trends affecting emerging markets.”
“A year ago, there was talk of an emerging markets meltdown and of a new ‘fragile five’ based on concerns about weakness in South Africa, Brazil, India, Turkey and Indonesia,” said Essa Al-Saleh, president and chief executive officer of Agility Global Integrated Logistics. “Emerging markets as a group turned out to be far more resilient – even vibrant – than expected despite continued sluggishness in the global economy.”
For 2015, the International Monetary Fund forecasts average growth for the 45 countries featured in the index at 4.6 percent.
“The factors driving growth are increases in population, size of the middle class, spending power and urbanization rates, along with steady progress in health, education and poverty reduction,” Al-Saleh said. “That’s why we remain optimistic about emerging markets and continue to see them on an upward trajectory.”