Credit insurance provider Atradius recently released some of the emerging markets set to be promising for 2017, which could be a boon for the trade industry. These markets are less vulnerable to external volatility such as U.S. trade restrictions, a strong dollar and projected outlook for higher interest in advanced markets. They rely on growth from consumption within their own regions, are in areas with young and active populations that drive demand and have a need for imports and investment, and are supported by governments that foster business-friendly environments.
Atradius’ research based on these factors shows India, Indonesia, Kenya, Cote d’Ivoire, Peru, Chile, and Bulgaria to be well positioned to support growth and weather global challenges in the coming year. The markets within these regions that look to be promising include:
- Agriculture and Food: Opportunities abound for foreign food exporters in Bulgaria due to rising demand and a fragmented food market. In Kenya and Peru, rising consumer confidence and incomes are also boosting demand for imported food and beverages.
- Chemicals and Plastics: Higher industry and household demand for chemicals in Bulgaria has the country importing more than 80% of these products. Likewise, total imports of chemicals for India have grown to $19 billion in 2015, from $10 billion in 2013.
- Construction: Indonesia, India, Peru, Cote d’Ivoire, and Kenya are seeing increased construction opportunities due to higher demand/need for infrastructure and a spike in investment growth. In Indonesia, the government has fast-tracked infrastructure improvement, with real fixed investment forecasted to increase above 6% in 2017. In addition, government plans in India are also supporting infrastructure growth, which is directly correlated with economic improvement. Large public works are expected under Peru’s new administration. Additionally, Côte d’Ivoire and Kenya are undertaking major infrastructure upgrades, which should provide significant opportunities for building materials and capital goods providers in the coming years.
- Machines and Engineering: The same infrastructure investments are also responsible for boosting opportunities for machines and engineering. In Bulgaria, the demand is driven by accelerating European Union investments. Indonesia’s construction surge will also see a demand for more machines and engineering.
- Retail, Consumer Durables, and Electronics: Increasing wealth and stable low inflation are encouraging consumer spending by an emerging middle class in Côte d’Ivoire. This bodes well for retail and fast-moving consumer goods in 2017 and beyond. In Chile and Peru, the retail sector is also forecasted to expand while opportunities can also be found in India due to a very large, consumption-driven economy.
Atradius sees volatility less pronounced in these emerging markets because of strong domestic demand, investment-led GDP growth, and a demographic tailwind. However, risks do remain for companies in emerging markets that have loaded up on dollar-denominated debt. What’s more, a stronger dollar could stunt earnings due to higher interest payments and elevated refinancing risk. It’s important therefore that logistic service providers understand their customers and their business environment to anticipate risk in the trade industry and how to best mitigate that risk.
About Roanoke Underwriting
Roanoke Underwriting serves the commercial marine insurance and customs bond needs of agents and brokers throughout North America working with supply chain risks and logistics service providers. For more information about our products, please contact us at 1.855.213.4545.