SINGAPORE — Emerging nations still offer the most opportunity for businesses and logistics service providers, even if growth rates have slowed, industry leaders told delegates at a major logistics conference held in Singapore last week.
According to the IMF, emerging markets accounted for less than a third of world GDP in 1990, but this year they will generate more than half. Even though GDP growth has slowed in the BRICS — Brazil, Russia, India, China and South Africa — bloc and in Indonesia, they are still seeing much faster growth than mature markets.
“The BRICS are in transformation so by definition it’s a bumpy road,” Wolfgang Lehmacher, partner and managing director for Greater China and India at consultancy Corporate Value Associates, told delegates at Transport Intelligence’s Emerging Markets Logistics Conference and BT Global Logistics Roundtable.
“Shanghai is very developed, but go west and it’s very different. Emerging markets are difficult to manage, and they are very complex. But the BRICS are still regional powerhouses. They are still fast-growing markets, and they are still driving global growth.”
His analysis was supported by the latest figures from Drewry, which found that container traffic loaded and discharged in the BRIC region’s ports in the first six months of 2013 grew by 7.1 percent year-on-year, up to 90.7 million 20-foot-equivalent units, significantly higher than the growth recorded at ports in North America (1.2 percent) and Europe (zero).
“Although their economies slowed significantly, the message is that the BRIC region is still very much alive and kicking,” Drewry said.
Speaking to JOC at his Singapore office, Michael Drake, the head of TNT Express’ Asia-Middle East-Africa business unit, said he found the “depression” around the BRICS economies hard to fathom.
“Growth in these markets is in the main massively higher that in most other countries,” he said. “China’s GDP growth is still particularly attractive. So, as a company, there is no reason not to be upbeat about BRICS.”
Essa Al-Saleh, president and CEO of Agility Global Integrated Logistics, told TI delegates that the emergence of the BRIC economies was the defining megatrend of our age. He predicted they would continue to bolster global logistics demand. “Asia’s emerging marked continue to provide a mix of dynamism and political stability that makes them very attractive to logistics companies,” he said.
Quoting a study by Ernst & Young, Al-Saleh said emerging markets would expand 4.6 percent in 2013 and by 6 percent in 2015-2016. By 2020 they will account for two-thirds of global economic growth. By 2030, China will have surpassed the U.S. to become the world’s largest economy and will account for almost a third of global GDP.
“This is a huge opportunity for global trade and trade flows,” he said. “There will be bumps, and the softening of global trade has hurt emerging markets, and they need more reform. It won’t be smooth sailing, but if that was the case then the growth opportunities and returns would be much less.”
Lehmacher said it is irrelevant whether the BRICS economies surpass the economic might of the G7 by 2027, by 2050 or never. “I think it will happen, but the fact is, they are still growing more strongly than the West, and their populations are still growing,” he said.
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