October 15, 2019 – Heading into 2020, the world is bracing for deceleration in two major economies: the US and China. For the US, 2019 GDP growth is expected to be 2.6%, moderating to 1.9% in 2020. China’s growth is forecast at 6.2% in 2019, decelerating to 6.0% in 2020.
Deglobalisation and trade tensions
The impact of the escalating tariffs between the US and China on the growth outlook of these two powerhouse economies is becoming evident, but how will emerging markets be affected by this? Which emerging countries stand to gain or lose the most? The Agility Emerging Markets Logistics Index Survey 2020 (AEMLI) seeks to answer to these questions.
Now in its eleventh year, the AEMLI survey seeks to identify the emerging markets that offer the best logistics opportunities and discover how they stack up against one another. One of the survey objectives this year is to assess the impact of deglobalisation and trade barriers on logistics investments plans. Are logistics companies planning to scale down operations in China or exit China entirely as a result of the trade war between the Trump administration and China? If companies move operations from China, where are they most likely to relocate? How will South East Asian countries that both feed Chinese supply chains and compete with Chinese manufacturers be affected by US-China trade tensions?
Shifting supply chains
The overwhelming suggestion from last year’s survey was that the inflow of investment in South East Asia is likely to accelerate as a result of the trade war. 56.1% of survey respondents demonstrated a belief that South East Asian markets stand to benefit from ongoing trade tensions between the US and China. Indeed, this was a perspective reinforced by the strong performance of South East Asia’s major emerging markets – Indonesia, Malaysia, Vietnam, Thailand and the Philippines – in the 2019 Agility Emerging Markets Logistics Index. It will be interesting to see whether and how the views of logistics professionals have changed since last year and which individual countries logistics professionals believe will benefit from the trade spill over from China.
This year’s edition of the survey also looks at the potential of megacities – those cities with more than 10m inhabitants. Of the 33 megacities in 2018, 27 were located in emerging regions, with six of these in China and five in India. Of the 10 new megacities expected by 2030, nine are in emerging markets. Megacities provide a series of unique risks and opportunities for developing countries. They also require vast logistics support both internally and as import and export hubs. The AEMLI survey investigates this topic and seeks to identify the megacities in emerging markets that offer the best logistics opportunities. Alongside this, the survey aims to determine which logistics services will provide the best opportunities within megacities.
Overall, 2020 should be another year filled with optimism around emerging markets. The IMF forecasts 2020 GDP growth of 4.7% in emerging markets, up from 4.1% in 2019. It is up to the industry and logistics professionals to give their own views on the growth outlook and the key trends in emerging markets by taking part in the survey. These views will form part of the 2020 Index which continues to be an independent and insightful source of information on markets in developing countries.
Source: Transport Intelligence, October 15, 2019
Author: Violeta Keckarovska
Contribute to the 2020 Agility Emerging Markets Logistics Index – Survey
The survey is now open and all participants will be the first to receive the index when published as well as being offered the chance to win an iPad.