China slowdown leading risk to emerging Asia’s growth in 2016—survey

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XinYu-mA slowing China has emerged as the top threat to the growth of emerging markets in Asia-Pacific in 2016, according to results of a poll among supply chain industry executives.

In a new survey of more than 1,100 global logistics and supply chain executives, respondents identified the possibility of an “economic shock” brought about by the cooling economy of China as the leading risk for the Asia-Pacific region.

The survey is part of the 2016 Agility Emerging Markets Logistics Index, which 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, natural disasters and corruption were regarded by logistics executives as the top threats in Asia. This time, 54.8% 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% 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 No. 3, behind only China and United Arab Emirates (UAE), amid strong economic performance and an initial round of reforms launched by the government.

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).

Other findings of the index indicate that seven of the 11 Asia-Pacific countries in the index rank among the top 20 emerging markets. Only Indonesia, which dropped three spots to No. 7, fell in the rankings.

Moreover, industry executives continue to see trade routes originating in Asia as, by far, the most promising. Their top six picks for trade lanes all have Asian origins, and intra-Asian trade lanes are the ones they view as best for 2016.

Photo: PanShiBo