Atradius Sector Picks: Agriculture, Machinery in Indonesia and Vietnam, Infrastructure in India

Business opportunities are brightening in emerging markets, but monetary tightening in developed economies and the slowdown in China’s GDP growth remain as downside risks, according to trade credit insurance provider Atradius.

Based on its analysis of trade and macro-economic trends, the Amsterdam-based insurer forecasts strong 2018 performance in Colombia, Costa Rica, the Czech Republic, India, Indonesia, Morocco, Panama, Senegal, and Vietnam.

Domestically driven growth

Atradius describes these emerging markets as “economies with strong, domestically driven economic growth and with the capacity to deal with external shocks.”

Their economies are “fueled primarily by private consumption and fixed investment as well as sufficient external buffers and a flexible exchange rate reduce the downside risk stemming from global volatility,” it says.

They also have young and growing populations with an expanding middle class, which are boosting consumption and increasing demand for investment and imports. Finally, macro-economic policymaking is improving in these countries, particularly in India, Indonesia and Vietnam.

Industry Sectors

Asian businesses looking for opportunities in emerging Asia should look at agriculture and food (Indonesia and Vietnam), automotive and chemicals & plastics (Vietnam), infrastructure (India), pharmaceuticals (India and Indonesia) and retail and consumer durables (India, Indonesia, Vietnam).

“The food sector in Indonesia is forecast to grow between 7% and 8% this year, and demand for imports, particularly of fruits, dairy, eggs, wheat, soybean and sugar, is expected to remain high,” Atradius reports. “Demand for dairy products is also high in Vietnam where fertilizer use is expected to pick up to support the higher agricultural production.”

The removal of tariffs on vehicle imports from ASEAN member states is expected to drive passenger vehicle sales in Vietnam in 2018, says the insurer. “With a lack of suppliers with a strong domestic presence, reliance on imports for automobile production is likely to remain high.”

“In India, a heavy government push for roads, railways, defense, and power is increasing demand in the infrastructure sector,” adds Atradius. Organized retail in the country is expected to pick up as the government eases restrictions on single and multi-brand establishments.

Private consumption is expected to grow 6.9% in Vietnam. An increasingly affluent middle class in Indonesia is driving demand in the retail and consumer electronics sector, which is also getting a boost from a shift to online shopping as Indonesia’s e-commerce industry jumped around 30% in 2017.

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