John Manners-Bell, the CEO of Transportation Intelligence (TI) said investors in emerging markets need to be discerning in a confusing and complex world. That said, TI has ranked emerging markets using economic and trade data, social indicators and transport development to rank 45 markets for their potential in logistics.
Some key findings were identified such as India replacing China as the emerging market with the most growth potential. Economic shocks edged out natural disasters by 1.4 percent with corruption right behind them, followed by poor infrastructure as the top risks in the Asia Pacific. With sanctions lifted in Iran, the country has potential as a logistics market, moving up 12 spots in the index from 27 to 15.
Not surprisingly, with all of Latin America’s economic woes, falling prices of its exports and political turmoil, it’s losing ground. Yet, Brazil was still ranked third behind India and China as an emerging market. The top four countries with the least potential as an emerging logistics market are Syria, Iraq, Ethiopia and Libya – three of them affected by war and terrorism.
More than one-third of respondents said poor governance was the key barrier to Brazil returning to higher growth. Corruption and excessive government debt also contributed to barriers to growth in Brazil.
Bell said that oil prices and China’s economy are the number one risk to the global economy this year. Sub-Saharan Africa remains a frontier market with just 21.2 percent of respondents reporting that they have operations in the region. Consumer spending has replaced growth in energy and mineral sectors as the key driver of growth in Africa.
As far as trade lanes are concerned, the intra-Asia trade lane remains the strongest, according to survey respondents, although the responses to the region dropped 1.8 percent year-on-year. The second most robust trade lane was Asia-Europe, followed by Asia to North America.
Finally, for expectations for this year, 33.7 percent of those surveyed said they were still unsure whether the global economy would return to more stability in 2016. However, when reviewing responses from those with a positive view, to those who see the glass half-empty, a slight advantage is in favor of those expecting a less turbulent, if not stable 2016, with 39.4 percent expecting an improvement to the logistics landscape throughout the year.