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India, China lead annual Agility Emerging Markets Logistics Index 2018

Agility, a global logistics company, and Transport Intelligence (Ti), a leading analysis and research firm for the industry, released the 9th annual Agility Emerging Markets Logistics Index.

The Index, in its ninth year, is a broad gauge of economic competitiveness that includes a survey of more than 500 logistics industry professionals and a data-driven analysis of 50 emerging markets countries by size, economic strength, infrastructure, transport connections, and business climate.

In the 50-country Index rankings, compiled from economic, trade, and social data, the world’s two largest markets, China and India, come out on top again. Russia moves up three spots to No. 7 amid a resumption in growth. Brazil, struggling to climb out of its worst recession in a century, slipped from No. 7 to No. 9. Egypt, Bangladesh and Uruguay are among those making impressive gains in the Index. Egypt is the standout of the 2018 Index, vaulting six countries to No. 14 in the rankings, the largest jump of any emerging market.

Nigeria, Kazakhstan and Venezuela are among countries that disappointed. There is mixed news for others, including Ukraine and the Philippines.

The UAE is first in the region and is ranked third globally, after China and India, for a fourth consecutive year, staying atop the compatibility and connectedness sub-indices. The country is also attributed the number one spot for quality of infrastructure.

The compatibility sub-index is effectively a measure of market accessibility and the ease of doing business. Six of the top 10 ranked markets for compatibility come from the Middle East and North Africa (MENA) region. The business climates, infrastructure and transport connections of leading Gulf economies continue to be the best offered by the world’s emerging markets, according to Agility’s annual global logistics industry report. Outside of China, trade between the UAE and the EU is also among the strongest-growing trade lanes, with a growth of 11.8%.

When it comes to business conditions, the UAE, Oman, and Bahrain outclass all other countries in the 50-nation 2018 Agility Emerging Markets Logistics Index, a broad gauge of economic competitiveness. Saudi Arabia is No. 8; Kuwait is No. 16.

Countries in the region also rank at or near the top of the Index in quality of infrastructure and transport connections. UAE (1), Bahrain (5), Oman (6), and Saudi Arabia (7) were top performers.

Elias Monem, CEO of Agility Middle east and Africa, commented: “The UAE maintains its high ranking across several indices with its abundance of free trade zones, no corporation tax, the offer of full ownership and unlimited repatriation of profits still setting the benchmark for emerging markets. The capital Abu Dhabi has several high-profile infrastructure projects coming online, and we are accommodating that growth through our expanding business. The countries in the region are moving aggressively to spur non-energy economic growth, create jobs, lure new investment, and develop knowledge economies. In the Gulf, it’s never been easier to start or buy a business, to commercialise a good idea, to find and hire young talent, and to plug into the global economy.”

Key Index and Survey Highlights
  • Egypt’s improving business climate drove its surge in the Index. In market compatibility, the category of the Index that looks exclusively at business conditions, Egypt shot up 26 spots, the most dramatic jump made by any country in any portion of the Index since it was first published in 2010. Egypt also improved its rank three spots in the area of the Index that evaluates infrastructure and transport connections.
  • Emerging markets growth prospects look brighter than they have in years to logistics industry executives, who say small and medium-sized companies are the most likely to benefit from fresh acceleration of those economies. Nearly two-thirds surveyed agree with the International Monetary Fund’s 2018 emerging markets forecast of 4.8%-4.9% GDP growth. That would mark the fastest expansion for emerging markets since 2013 and a second consecutive year of higher growth for developing economies, which have slowed dramatically since a 7.4% GDP gain in 2010.
  • There is no consensus among supply chain professionals when it comes to the Trump administration’s high-stakes brinkmanship with Mexico and Canada in negotiations aimed at updating the North American Free Trade Agreement (NAFTA). They are sharply split about whether a new agreement would help Mexico (24.3%); hurt Mexico (21.8%); or leave trade broadly unchanged (25.7%).
  • Logistics executives are unconcerned, for now, that emerging markets economies will be harmed by Brexit, the UK’s departure from the European Union. Nearly 45% say emerging markets will be unaffected; 25.4% say emerging markets could gain from Brexit through expanded market access. A year ago, nearly 69% expressed concern that Brexit and the failure of various trade initiatives were a threat to trade.
  • 55% of those surveyed say small and medium-sized businesses – those with fewer than 250 employees – will benefit most from emerging markets growth. Twenty-size percent said large companies would be the biggest beneficiaries.
  • Cheap labor is losing its attraction as a driver of emerging markets growth in the eyes of logistics professionals. They rate economic growth, foreign investment, trade volumes, location and transport infrastructure as more important factors.

John Manners-Bell, chief executive of Ti, says: “Emerging markets enjoyed favourable market conditions in 2017 with trade growth the healthiest in years. However, there are many storylines yet to fully unfold, such as China’s debt, the renegotiation of NAFTA and ongoing political and economic transition in the Middle East. While the going looks good for now, there are numerous challenges on the horizon.”

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