ShareHurt by budget gap and struggles to find new revenue, encourage private-sector growth
BAAR, Switzerland: After running its first budget deficit in 17 years, Kuwait fell to No 26 in Agility's closely watched index of the world's 50 top emerging markets. Kuwait dropped three spots in the 2017 Agility Emerging Markets Logistics Index despite the fact that its business conditions ranked 10th-an area of the Index that was dominated by Gulf states.
The Index, now in its eighth year, ranks emerging economies based on their size, business conditions, transport infrastructure and ocean/air connections - factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors. Agility also surveyed more than 800 supply chain industry professionals for their views logistics markets.
China and India topped the Index at No. 1 and No. 2. Among Gulf countries, United Arab Emirates (3), Saudi Arabia (5), Qatar (12), Oman (13) and Bahrain (13) ranked highest. Bahrain climbed five spots in the latest Index and was among the countries showing the biggest gains.
Transport Intelligence (Ti), a leading analysis and research firm for the logistics industry, compiled the Index for Agility. Ti noted that all Gulf economies are dealing with a "new normal" of low oil prices and are struggling to diversify their economies, find new sources of revenue, and wean their populations from subsidies and welfare state benefits.
Kuwait has announced ambitious plans to stimulate private sector job creation, spur competition, attract foreign investment and use public-private partnerships to drive big development projects. Many of those plans remain in the early stages or have yet to produce results.
Kuwait scored poorly - 31st-in logistics infrastructure and transport connections behind countries such as Peru, Kenya and Ukraine.
2017 Index highlights:
* Turkey improved ranked No. 9, moving up one spot ahead of Russia, despite fallout from an attempted coup and extremist violence.
* Logistics executives picked Syria, Libya and Iraq, all in the grip of violence and war, as the three emerging markets countries with the least logistics potential.
* Iran, emerging gradually from years of international isolation, leaped eight spots to No. 18 in Index. In Agility's survey of logistics executives, Iran climbed to 9th from No. 15 among countries with the most potential to grow as logistics markets. Iran's gains were the largest of any country in the 2017 Index or the survey.
* China, the world's second-largest economy, remains the world's leading emerging market ahead of India, which climbed past UAE to No. 2 in the latest rankings. In the survey, supply chain executives identified the direction of China's economy as the factor most likely to drive global economic and trade growth in 2017. Seventy-six percent said China's economy is slowing, but only 17% said the slowdown is significantly hindering the transport and logistics sector. Nearly 66% said slower growth will not alter their plans in China.
* Outside of the Gulf countries and Turkey, Egypt (20) and Morocco (22) were the MENA countries ranking highest in the Index. Algeria (31) and Jordan (33) improved their rankings slightly in the latest Index. Tunisia (42) slid five spots; Libya (46) and Lebanon (47) each fell three spots.
* Robust growth and long-anticipated tax and economic reform pushed India to No. 2 in the Index and impressed logistics executives responding to the survey. Even so, India's surprise decision to remove high-denomination bank notes from circulation and encourage cashless payments could be jarring for the economy in 2017.
* Despite upbeat views of India and Iran, industry professionals sounded notes of caution about the broad outlook for emerging markets. Nearly 69% expressed concern that the UK's Brexit vote and the failure of global and regional trade initiatives signal a threat to trade. A sizeable minority - 43% -- said the International Monetary Fund is too optimistic in forecasting 4.6% growth for emerging markets in the coming year.
* Africa's biggest economies - Nigeria and South Africa - were among the countries that fell most sharply in the Index. Smaller African markets - Uganda, Ethiopia, Tanzania, and Kenya - improved their rankings in 2017.
* Brazil held its No. 7 Index ranking despite a painful recession and the impeachment of President Dilma Rousseff. In the survey, logistics executives again picked Brazil as the the market with the most logistics potential after India and China. One reason for their optimism: nearly 57% expect commodity prices to rebound in 2017, although most do not expect significant increases.
Transport Intelligence (Ti), a leading analysis and research firm for the logistics industry, compiled the Index.
John Manners-Bell, Chief Executive of Ti, said: "Uncertainty and volatility have characterized many emerging markets in 2016. This has been compounded by the political environment in Europe and the US, which will have direct consequences on trade with Latin America, Asia and Africa. However there have been many positives too-for example, the strong performance of India. More than ever, the Index identifies and contrasts those markets which will prosper from the most vulnerable and poorest performing."
Note: 2016 Index results were recalculated for 2017 because five countries - Iran, Ghana, Myanmar, Angola and Mozambique were added. After recalculation, Kuwait's original 2016 ranking was adjusted to No 23. Ti calculated 2016 scores for each of the new countries to provide a basis for year-to-year comparisons.
