Risk of China Slowdown Offsets Optimism about India for Logistics Industry
In a new survey of more than 1,100 global logistics and supply chain executives, respondents identified the possibility of an “economic shock” as the leading risk for the Asia-Pacific region, reflecting concern that a slowing China could have a ripple effect on the region
Supply chain industry executives see a slowing China and fluctuating oil prices as the top threats to emerging markets growth in 2016, and are braced for more volatility in the global economy.
In a new survey of more than 1,100 global logistics and supply chain executives, respondents identified the possibility of an “economic shock” as the leading risk for the Asia-Pacific region, reflecting concern that a slowing China could have a ripple effect on the region.
The survey is part of the 2016 Agility Emerging Markets Logistics Index. The Index, now in its seventh year, provides a snapshot of logistics industry sentiment and ranks the world’s 45 leading emerging markets based on their size, business conditions, infrastructure and other factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors.
“The region’s worries about China are understandable. Other countries fear a slowing China means a weaker currency that will hurt their competitiveness. At the same time, China’s suppliers – from mines in Africa to component makers in Asia – are concerned that demand for their products could fall significantly,” said Chris Price, CEO of Asia-Pacific for Agility Global Integrated Logistics.
In past Index surveys, logistics professionals identified natural disasters and corruption as the top threats in Asia. This time, 54.8 percent of executives say China’s economy faces major hurdles over the next two or three years. Thirty-eight percent say they are reassessing their China strategy as a result. Sluggishness in the Chinese economy has prompted 22 percent to re-examine their overall emerging markets strategy.
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 economic and social data, India climbed two spots to number threee, behind only China and United Arab Emirates (UAE), amid strong economic performance and an initial round of reforms launched by the government of Prime Minister Narendra Modi.
China, the world’s second-largest economy, remains the leading emerging market by a large margin. Among the countries at the top of the Index rankings, UAE (No. 2), India (3) and Malaysia (4) leaped over the commodity-dependent economies of Saudi Arabia (5), Brazil (6) and Indonesia (7). Rounding out the top 10 were Mexico (8), Russia (9) and Turkey (10).
“It was a volatile year for emerging markets, and you see that in the Index. Eight of the top 10 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.”
View the 2016 Agility Emerging Markets Logistics Index here: www.agility.com/2016index