News / Growth prospects in emerging markets ease concern over China-US trade tension

© Egor Kotenko

Trade friction between China and the US may be weighing on logistics executives’ minds, but growth prospects in emerging markets are lightening the mood.

According to Agility’s Emerging Markets Logistics Index (EMLI), there is predicted growth of 5% in new markets.

Agility CEO Essa Al-Saleh said: “Those looking for opportunity are finding it in emerging markets, with SMEs with access to tech and mobile banking increasingly driving growth.

“At the same time, logistics professionals worry that these markets are vulnerable to ripple effects from big geopolitical setbacks.”

The EMLI surveyed more than 500 supply chain professionals, with more than 55% describing the 4.7% growth rate of emerging markets as “about right”.

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According to the IMF, these markets should expect some 4.5% growth over the course of 2019, but 47.1% of participants said an emerging market crisis was “likely” or “highly likely”.

“Concerns about emerging markets in 2019 are valid, especially in countries with significant dollar-denominated debt,” said Mr Al-Saleh. “But as a group these markets are growing at roughly twice the rate of developed economies.

“What’s most heartening is that many now appear resilient enough to avoid the sort of contagion we saw among emerging markets in 2013 and 2008.”

While respondents broadly thought there were multiple opportunities for foreign companies in emerging markets, international express parcel and delivery was the most popular.

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In terms of technology, the most important in terms of facilitating emerging market trade growth was the modernisation of customs systems and processes.

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With ongoing trade tensions between China and the US, there are expectations that as much as 10% of volumes could be lost on these tradelanes. Even so, China, apart from India, ranked the highest in terms of logistics market opportunities in 2019, based on both domestic and international business.

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Chief executive of Ti John Manners-Bell said: “This year’s index highlights the range of challenges and opportunities many markets face. Uncertainty surrounding trading relationships, combined with new trade barriers, threatens to derail integration of emerging markets with the rest of the world.

“It is essential that obstructive trade policy does not stand in the way of commercial opportunities which help drive growth in emerging markets.”

But the report also notes that Brexit could benefit emerging markets, with 59% of respondents expecting emerging markets to seek trade concessions and new deals from the UK. And some 79% think emerging markets will be unaffected by Brexit.

You can read the report here