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trade20 The rising stars of global trade
Standard Chartered Trade20: the rising stars of global trade
Contents
Contents 2
Foreword 3
Executive summary 4
Methodology 6
Trade20: the rising stars of global trade 7
Asia-Pacific 8
Africa 17
Middle East 19
Europe 21
The Americas 22
Pillar rankings 23
Conclusion 25
Detailed methodology 26
Appendix 29
2
Standard Chartered Trade20: the rising stars of global trade
Foreword
The Standard Chartered Trade20 index tells the story of the rising stars of global
trade, examining the progress that markets have made in the past decade to
improve their potential for trade growth. Our findings offer encouragement in an
era where growing protectionism and rising trade tensions have placed global
trade in the spotlight as never before.
Promoting trade has long been regarded Smaller, emerging markets like By making gains in their economic
as a critical lever to accelerate economic Côte d’Ivoire, Kenya and Oman are dynamism, trade readiness and
development, increase competition on an upward trajectory, progressing export diversity, these rising-star
and improve productivity. Yet, world at pace from a relatively low starting markets are showing improving trade
trade growth has slowed since the point. Buoyed by regional trade deals growth potential, and therefore offer
global financial crisis and today we face and liberalising economies, several opportunities for outward-looking
new uncertainties, with heightened ASEAN economies, including businesses. While it is impossible to
geopolitical risk also affecting the Vietnam, Indonesia and Thailand, predict the future of trade, this study
international trade environment. also rank highly. shines a spotlight on the ‘ones to
watch’.
Against this backdrop, we wanted to Meanwhile, China and India show that
explore the extent to which economies improving trade growth potential is not Protectionism is a growing threat to
around the world have continued to just the preserve of newly emerging world trade, but our analysis suggests
pave the way for stronger trade. economies. Impressively, these major that improving trade growth potential
markets are increasing their own trade in recent years offers hope for the
While the threat from protectionism is prowess from a starting point future. This, together with a wide range
real – and many of the markets in our as already established trade powers, of new free-trade agreements signed
study face short-term challenges – our while driving the trade growth of or under negotiation with the European
analysis shows that a wide range of partners. Of course, these much larger Union (EU), or on a regional basis,
economies have significantly improved economies have the greatest trade suggests that there are also positive
their potential for trade growth in recent potential in absolute terms, but smaller developments in international trade.
years. By expanding inward foreign peers may rival them in terms of speed
investment, increasing trade readiness of progress and potential for growth Despite current challenges in the open
through improvements in infrastructure relative to their size. trade system, we remain reasonably
and the business environment, or confident that, in the medium and
diversifying their exports, among other What the Trade20 markets have long term, trade can be a driving force
developments, these markets have put in common, whether big or small, for economic growth and increasing
themselves in a better position to grow emerging or developed, is their prosperity across the globe.
trade over the medium and long term. pace of progress and the growing
opportunity they offer. The index points
The Trade20 reveals that key markets to high-potential markets that may be
in Asia-Pacific, Africa and the Middle of interest in terms of future investment
East demonstrate particularly impressive opportunities, or as import markets
progress in trade growth potential. and supply chain partners.
What the Trade20 markets have in common,
whether big or small, emerging or developed,
José Viñals
is their pace of progress and the growing Group Chairman
opportunity they offer. Standard Chartered
3Standard Chartered Trade20: the rising stars of global trade
Executive summary
Trade20 reveals the rising stars of world trade: the 20 markets that have
demonstrated impressive progress in trade growth potential in the last decade.
These markets are identified by measuring changes in 12 metrics across three
pillars: economic dynamism (foreign direct investment, export and GDP growth),
trade readiness (infrastructure, e-commerce and ease of doing business) and
export diversity (the range of exports).
Trade20 points towards strong momentum is trade readiness, as rapid Many of these economies have
potential for trade growth for a number urbanisation and growing middle- also signed, or are negotiating, new
of markets outside the China-US- class populations spur infrastructure trade agreements with the EU, or
Europe trade axis, with India, the spending and improvements to the regional agreements such as the
ASEAN region, and several economies business environment. Comprehensive and Progressive
in Africa and the Middle East ranking Agreement for Trans-Pacific
highly. Fifteen of the Trade20 markets With world trade growth under Partnership (CPTPP), the Regional
are in Asia-Pacific, Africa or the Middle threat from rising protectionism, it Comprehensive Economic Partnership
East, and emerging markets dominate. is encouraging that many emerging (RCEP) and the African Continental
For many of these high-potential markets are still improving their trade Free Trade Area (AfCFTA).
emerging markets, the key driver of growth potential for the medium and
long term.
With world trade growth under threat
from rising protectionism, it is encouraging
that many emerging markets are still
improving their trade growth potential
for the medium term.
The ASEAN accelerators China: the engine of
global growth
Our index points to accelerated Asian
trade growth potential, with particularly While already a leading global trade
impressive performances by Vietnam, power, China has continued to
Indonesia and Thailand. Their success enhance its trade growth potential
is driven by improving trade readiness, through its ease of doing business
suggesting that regional trade deals, score and improvements in
infrastructure improvements, and infrastructure, both physical and digital.
legislative reforms are promoting China also plays a pivotal role in the
increased openness. In the face of success of other markets, acting as a
rising protectionism and slow global key catalyst for global trade growth:
growth, the ASEAN accelerators are with only a few exceptions, our
forging ahead with trade deals and research shows that the higher the
liberalising their markets. market’s trade growth with China, the
better that market performs in terms
of economic dynamism and trade
readiness.
4Standard Chartered Trade20: the rising stars of global trade
Middle Eastern markets diversify
Three Middle Eastern markets achieve
a place in the Trade20: Oman, the
UAE and Bahrain. It is improvements
in export diversity that propel these
Middle Eastern markets, pointing to
the economies that are successfully
moving away from over-reliance on
oil. All three markets have become
important trading hubs.
Ireland stands out in Europe
European markets mostly rank outside
the Trade20, predominantly because
they are developed economies so
the space to grow their trade growth
potential further is limited. Multinational
magnet Ireland stands out as a notable
exception: it is the only EU economy
to appear in the Trade20. Ireland’s
success is largely based on its ability
to attract increasing amounts of
foreign investment, with corporates
encouraged by its low corporation tax
rate and its status as a ‘launch pad’
to the rest of Europe.
India: promising particularly impressive that Hong Kong In Latin America,
improvements and Singapore perform so well in the Chile pulls ahead
index. Economic dynamism is the key
Twenty-five years ago, India was a strength of these markets, with their While emerging markets in Asia-Pacific,
relatively closed economy. Today it already-high levels of foreign direct Africa and the Middle East rank highly,
is an emerging powerhouse of trade investment continuing to increase. emerging markets in Latin America
and our index shows it is continuing These ambitious economies keep do not score as well, showing limited
to enhance its trade growth potential. striving for improved trade, with their improvements in terms of export
India performs well in the Trade20, governments buttressing them against diversity. Chile is the only market in
largely driven by its trade readiness economic headwinds by negotiating the Americas to achieve a place in
improvements. Efforts to prioritise trade additional free-trade agreements and the Trade20, with its scores propelled
as a key lever of growth and make the removing existing trade frictions. by infrastructure and e-commerce
market more attractive to business improvements that its neighbours are
are key to keeping it on an upward struggling to achieve.
trajectory, allowing India to capitalise on Three markets lead
its strong foundations of GDP growth the way for Africa
and large working-age population.
A cluster of African economies show
substantial momentum in trade growth
Financial hubs remain potential, placing them at the very
in the ascendant top of the Trade20. Nations that were
lacking this momentum not long ago
Hong Kong and Singapore rank are now growing and modernising
much higher than most developed their economies: Côte d’Ivoire and
economies, demonstrating progress Kenya are leading the pack and Ghana
in trade growth potential despite their also performs well. The particularly
market status. Our analysis focuses on strong trade readiness exhibited by
improvements in key metrics, which Côte d’Ivoire and Kenya is driven
are generally harder for developed by improvements to their business
markets to demonstrate, as most environments, with enhanced digital and
have already attained a high level physical infrastructure, and moves to
of trade performance. It is therefore improve their ease of doing business.
5Standard Chartered Trade20: the rising stars of global trade
Methodology
Trade20 examines 12 metrics across 66 global markets — the major global
economies plus the major economies in each region — to reveal the 20 economies
that are most rapidly improving their potential for trade growth.
While most traditional trade indices yet available. Economies that do not It is important to note that some
are based on a market’s present appear near the top of the ranking do markets are improving fast from a low
performance, our index captures not necessarily have poor trade growth starting point, while others are moving
changes over time to reveal the potential – they may be starting from a quickly from an already-high starting
markets that have seen the most high base, so have less room to grow. point.
improvement in the past decade. This
enables us to identify the economies We have determined each market’s The study does not examine the
where developments may point to an potential for trade growth by analysing trade growth potential of each market
acceleration in trade growth potential. changes across a wide range of in absolute terms, but its individual
variables, grouped into three equally potential for trade growth relative to its
Higher exports are strongly correlated weighted pillars: economic dynamism, size. In absolute terms, large economies
with higher imports, of both capital and trade readiness and export diversity. will, of course, offer greater potential
consumer goods, offering opportunities and opportunity overall than smaller
for companies worldwide. A high ranking The 20 markets that score best across markets.
also suggests a market that is improving all three pillars are the Trade20. They
as a possible outsourcing location. include both established trading powers Please refer to the detailed methodology
that continue to build their potential (pages 26-28) for further information.
Improvements made very recently may for trade growth and newly-emerging
not be reflected in a market’s position in markets that have shown impressive
the index, because the metrics capture progress in areas that might help them
change over a period of time, and increase their trade.
because data for the current year is not
Economic dynamism
The economic performance of a market, measured
by the increase in inward foreign direct investment
(FDI), as well as export and GDP growth.
Trade readiness
The extent to which a market has the foundations
to support future trade growth, measured by
improvements to physical and digital infrastructure,
e-commerce, and the ease of doing business.
Export diversity
A market’s progress in its breadth of exports, measured
by the variety of products exported and how export
revenue is spread across that product range.
6Trade20: the rising 1 Côte d'Ivoire
stars of global trade
2 India
3 Kenya
4 China
5 Ireland
The Trade20 index tells the story of the rising stars of global trade,
6 Vietnam
identifying the economies in each region that have the greatest
7 Indonesia
trade growth potential. The index highlights existing trade powers
8 Thailand
like China, India and Singapore; medium-sized trading economies
9 Oman
like Vietnam, Indonesia and Thailand that continue to make good
10 UAE
progress; and smaller trading nations like Côte d’Ivoire, which
11 Hong Kong
are showing great promise.
Russia 12 Russia
13 Ghana
14 Sri Lanka
15 Bahrain
16 Singapore
17 Switzerland
Ireland
18 Chile
Switzerland 19 Turkey
20 Philippines
Turkey
China
Bahrain
UAE Hong Kong
India
Oman
Thailand
Vietnam Philippines
Ghana
Sri Lanka
Côte d'Ivoire
Kenya Singapore
Indonesia
Chile
Green market shading represented
on maps throughout this report is not
indicative of the Trade20 rankingStandard Chartered Trade20: the rising stars of global trade
Asia-Pacific
Home to both rising stars Markets in Asia-Pacific – including Although already major exporters,
and trade powerhouses, India, China, Sri Lanka and ASEAN Asian trading powers India and China
– dominate the Trade20: nine of the rank highly, showing that their potential
Asia-Pacific markets Trade20 economies are in this region, to increase trade continues to grow,
remain focused on suggesting that the potential for even from their high starting point.
individual markets to increase their China’s trade readiness improvements,
improving trade growth trade growth is particularly high in Asia. including ambitious infrastructure
potential. projects that will be initiatiated as part
A cluster of Asian markets is of the Belt and Road initiative (BRI) to
progressing particularly well in terms enhance connectivity between China
of trade readiness, including existing and its trading partners, underpin its
trading giants China and India, continued pace of progress, but it is
and ASEAN accelerators Vietnam, China’s effect on the trade growth
Indonesia, Thailand and the Philippines. potential of other nations that places
While there is currently a focus on it in a league of its own.
US-China trade tensions, overall
these markets are benefitting from
regional trade deals physical and digital
infrastructure investments,
and increasing openness.
8Standard Chartered Trade20: the rising stars of global trade
Spotlight on China:
The engine of global trade
Building from a particularly high starting point, China’s trade growth potential has
continued to improve in the past decade. However, the deepening US-China trade
dispute and challenging global market conditions are likely to have a significant
impact on China’s trade in the short to medium term.
Crucially, exposure to China is a economic dynamism (Figure 1). China dispute to impact the trade of a wide
key factor in the high rankings of is clearly a major force for economic range of other nations, affecting the
developing Asia-Pacific and African dynamism in other markets, not just markets that trade with China as well
markets in the Trade20 index. With in high-performing South-East Asian as China itself.
only a few exceptions, the higher the economies like Vietnam and Indonesia,
trade growth with China, the better but also in African markets. This shows
these markets perform in terms of the potential of the US-China trade
Figure 1: A high ranking in merchandise export growth to China in emerging markets over the last ten years is correlated with a high ranking in
the economic dynamism pillar. Markets identified by blue dots had high levels of merchandise exports prior to the ten year period (Source of
merchandise export growth data: IMF Direction of Trade Statistics).
High
Côte d'Ivoire Ghana
Philippines
Vietnam
Malaysia
Mexico Sierra Leone
Rank in economic dynamism pillar
Tanzania Gambia
Peru
Thailand Kenya
Colombia
Indonesia
Brazil
Medium
Zambia
Uganda Cameroon
Botswana Nigeria
South Africa
Argentina
Angola
Low Medium High
Rank in 10-year increase in merchandise exports to China
Ranking near the very top of the Trade20 its ease of doing business. China’s and power stations. These boosts to
index, our study underlines China’s well- BRI places special focus on new global connectivity will be accompanied
recognised position as an economy that developments in Africa, where China has by further improvements to internal
is globally-oriented and changing fast. long played a key role in the sponsorship mobility, with the construction of new
China’s improving trade growth potential and financing of development schemes. railways, highways and waterways
is powered by gains in trade readiness, Chinese investment is helping to create easing domestic infrastructure frictions.
indicating marked improvements in its infrastructure networks, with projects
digital and physical infrastructure and covering railway lines, roads, airports
9Standard Chartered Trade20: the rising stars of global trade
China is also adopting a more accommodating stance legal requirements to work with Chinese businesses and
towards foreign commerce. Under its new Foreign Investment share technological secrets. These changes may further
Law, China increased the number of sectors for foreign increase China’s potential for growing its trade.
investment, created six new pilot free-trade zones and eased
Figure 2: China’s trade growth potential: radar chart of China showing its impressive
trade readiness performance
Diversity
100
80
60
40
20 China ○
Readiness Dynamism
The Standard Chartered view on China
We are confident that China’s trade potential will continue to grow as
domestic trade volume increases and as export destinations shift to
intra-Asia, Belt & Road initiative economies and Europe to replenish the
attrition in US markets.
Already the world’s second largest economy and a major trading
partner to most nations, China aims to transform itself into a strong
trading country by 2035 with the goal of becoming an economic and
trade giant by 20501. Given this ambition, it is important for China to
continue looking at ways to further open its economy to attract foreign
investments and deepen multilateral regional economic and trade
cooperation, especially in light of the ongoing US-China trade dispute.
Jiwei Ye
Head of Transaction Banking, China
1 Quote by China’s Commerce Minister, Zhong Shan:
www.straitstimes.com/asia/east-asia/china-aims-to-become-trade-and-economic-giant-by-2050
10Standard Chartered Trade20: the rising stars of global trade
Spotlight on India:
The giant of trade growth potential
India is likely to continue to prioritise trade as a key engine of growth, with the
government especially focused on relationships with the US and China, despite
recent geopolitical tensions.
With its large population and strong GDP permits, raise finance, pay taxes and India is likely to continue to prioritise
growth, India is poised to be a future import and export goods. trade as a key engine of growth. The
giant of world trade. Our index confirms government, with its mantra of “Reform,
this, showing that India has made strides India has also made rapid Perform and Transform” used its first
to improve its trade readiness potential. improvements in its digital budget to focus on stimulating growth,
Business reforms over recent years have infrastructure, spearheading mobile simplifying tax, digitising the economy,
helped to improve the market’s ease of payment innovations, witnessing further improving ease of doing business
doing business score, moving closer to rapid e-commerce growth and using and pushing forward with the ‘Make
international best practice and boosting technology to revamp the taxation in India’ initiative. The latter aims to
trade growth potential. system. While India still has some way encourage companies to manufacture
to go in its trade development journey, their products in India, with the intention
These reforms have made it easier to important progress has been made. of making it a global manufacturing hub.
start a business, obtain construction
Figure 3: India’s trade growth potential: radar chart of India showing a similar story to China,
the economy’s only peer in terms of trade growth potential in absolute terms
Diversity
100
80
60
40
India ○ 20
Readiness Dynamism
The Standard Chartered view on India
Policy improvements and the government’s focus on promoting the country
as a manufacturing hub are clearly paying off. We expect to see higher
investments flowing into India, which will ultimately result in increased
domestic and cross-border trade.
We also see tremendous potential for growth in trade digitisation backed by
newer technologies, clients willing to experiment and facilitative government
and regulatory mechanisms.
Ricky Kaura
Head of Transaction Banking, East
11Standard Chartered Trade20: the rising stars of global trade
Several ASEAN nations show The Philippines scores particularly intra-ASEAN trade, strong domestic
impressive momentum in their well for economic dynamism, driven demand, close trading ties with China
trade growth potential. The strong by strong export and GDP growth. and healthy job markets are helping
readiness scores of Vietnam These ASEAN nations have remarkable to propel these economies forward.
and Indonesia are driven by success stories to share, with economic While they all face the challenges of
improvements to their infrastructure and political reforms over recent heightened global uncertainty, they are
and ease of doing business scores, decades driving rapid economic growth well placed to benefit if multinationals
while Thailand has shown substantial and reducing poverty levels. Export- consider moving their supply chains
e-commerce growth. oriented manufacturing, growing due to trade tensions elsewhere.
Figure 4: ASEAN trade growth potential: radar chart reflecting
the common challenges and opportunities of top-ranking ASEAN economies
Diversity
100
80
60
Vietnam ○ 40
Indonesia ○ 20
Thailand ○
Philippines ○
Readiness Dynamism
The Standard Chartered view on ASEAN
Amid global challenges, Vietnam’s key export markets and FDI digitisation relatively quickly, helping to
ASEAN economies are showing contributors are from the region, which accelerate Asian trade growth.
remarkable strength, focusing speaks to the importance of intra-
on trade digitisation and ASEAN trade. The government knows In Indonesia, export is a key focus,
regional connectivity. the importance that digitisation plays in and export growth has been
the future growth of the economy and steadily increasing year-on-year. The
The Vietnamese economy is has proposed plans to digitise 50 per government is working to establish
the fastest-growing in the region, cent of businesses by 2025, with the trade agreements, expand into non-
a clear indicator of the benefits digital economy then accounting for traditional markets, and create a
the country is reaping from an around a quarter of the country’s GDP. conducive trade environment.
open economy. The government
has entered into a number of free Thailand has also been focusing on These markets look set for continued
trade agreements and foreign digitising processes and increasing growth as they continue to improve their
direct investment (FDI) continues efficiency across industries and trade readiness and grow intra-ASEAN
to flow into the country, with activities. A key area is international trade.
low-cost manufacturing a key trade and export in particular. Working
attraction, especially as US-China together with its regional neighbours, Ricky Kaura
trade tensions intensify. Thailand should be able to adopt trade Head of Transaction Banking, East
12Standard Chartered Trade20: the rising stars of global trade
Spotlight on Vietnam:
An ASEAN success story
Vietnam shows the strongest progress in trade growth potential of all the ASEAN
markets in the Trade20 index, driven by improvements to its trade readiness and
economic dynamism. The market’s improving strength in trade readiness is due
to infrastructure enhancements and improvements to its ease of doing business
score, while its economic dynamism is driven by healthy growth, particularly in
terms of export volumes.
Economic and political reforms This agreement will eventually and export growth. Rising tourism
over recent decades have spurred eliminate 99 per cent of all tariffs and inflows and stronger domestic
Vietnam’s economic growth, bolstered is also expected to open up the public demand, supported by higher
by strong domestic demand and procurement and services markets. wages, are also likely to sustain
manufacturing-led export success. The EU is Vietnam’s second-largest strong growth.
The market has solid foundations for export market after the US, and the
growth: it is politically stable, well- Vietnamese government has said that Indeed, Standard Chartered’s
located for global supply chains and the agreement could boost EU exports Economic Outlook for the third
has a relatively young population. to Vietnam by over 15 per cent, and quarter of 2019 predicts that Vietnam
The government has built on these those from Vietnam to the EU by will remain the fastest-growing ASEAN
foundations, focusing on business 20 per cent by 2020. economy in the near term, with export
reforms and deregulation, investing in growth continuing to outperform peers
human capital and infrastructure and Against a backdrop of global trade and FDI inflows remaining strong.
embracing trade liberalisation. turbulence and rising protectionism, While Vietnam may be particularly
Vietnam’s openness and integration vulnerable to ripple effects from the
In June 2019, Vietnam signed a can be an important lesson to other US China trade dispute, it may also
landmark trade deal with the EU, markets. be well-placed to benefit if it can
hailed as the most ambitious trade absorb demand diverted to other
agreement that the EU has signed Vietnam’s growth is likely to continue locations as suppliers relocate
with a developing economy. to be driven by FDI-led manufacturing from China.
Spotlight on Sri Lanka:
Figure 5: Sri Lanka’s trade growth potential: radar chart of Sri Lanka, showing its strong
performance in trade readiness
Sri Lanka’s impressive Trade20
performance is largely due to its trade
Diversity readiness improvements. Its excellent
trade readiness score is driven by
100
infrastructure upgrades,
80 with particularly strong progress in
60 terms of digital infrastructure. The Sri
Lankan government has been working
40
on an ambitious development strategy,
Sri Lanka ○ 20 overhauling the market’s sea, air, road,
power and telecoms infrastructure.
Readiness Dynamism
13Standard Chartered Trade20: the rising stars of global trade
Figure 6: Hong Kong and Singapore trade growth potential:
radar chart of Hong Kong and Singapore, where strong economic
dynamism is driving improvements in trade growth potential
Diversity
100
80
60
40
Hong Kong ○ 20
Singapore ○
Readiness Dynamism
Hong Kong and Singapore feature in the Trade20 index due to improvements to
their economic dynamism, primarily driven by strong FDI. These developed Asian
economies show impressive momentum in terms of attracting investment and
growing GDP and exports, despite their existing strength.
14Standard Chartered Trade20: the rising stars of global trade
Spotlight on Singapore:
The trade momentum enabler
Singapore’s economic dynamism is particularly strong. Even from its existing position
as a developed economy at the forefront of global trade, Singapore is still making
substantial progress to improve its trade growth potential, increasing levels of inward
FDI to consolidate its position as one of the world’s most important financial hubs.
The Singapore government has However, as a small, open market, which came into force last year,
been expanding the scope of its Singapore is vulnerable to global and the RCEP, which is currently
free trade agreements2 to keep pace economic pressures and a downturn under negotiation.
with global developments on issues could impact its trade strength. The
including e-commerce, intellectual administration is determined to explore As this is an index of change and
property rights, competition, new pathways to growth in the face of Singapore is already a global centre
government procurement and dispute international geopolitical and economic for trade, it is moving from a high
resolution. Ongoing digitisation challenges. The government has recently starting point. We can therefore expect
efforts are driving the information stated its commitment to focus on more modest progress in some areas,
and communications sector, while regional trade and digital agreements including trade readiness, as there is
infrastructure improvements are to counter the impact of the US-China very little room for improvement in
underpinning investment activity. trade conflict on its economy3. Important terms of ease of doing business
regional trade pacts include the CPTPP, and infrastructure.
The Standard Chartered view on Singapore
Singapore is in the process of implementing long-term policies that
should put it in a strong position to cope with the uncertainties of
escalating trade tensions. New technology like the Networked Trade
Platform will further improve the market’s ease of doing business,
and the government is engaging in high-level discussions with other
governments in Business sans Borders with the aim of igniting a
change in the way small and medium enterprises (SMEs) around
the world connect easily with each other to help grow trade in key
corridors. Regional challenges are giving rise to new opportunities
for Singapore, both in terms of opening up new markets and making
existing processes more efficient.
Himanshu Maggo
Head of Trade Product Management, Transaction Banking, Singapore
2 The Singapore government’s explanation of its FTA focus on the Enterprise Singapore website:
www.enterprisesg.gov.sg/non-financial-assistance/for-singapore-companies/free-trade-agreements/ftas/overview
3 A recent Bloomberg interview with Singapore’s Minister for Communications and Information:
www.bloomberg.com/news/articles/2019-06-28/singapore-to-focus-on-regional-deals-as-trade-war-thwarts-growth
15Standard Chartered Trade20: the rising stars of global trade
Spotlight on Hong Kong:
The strength to withstand trade headwinds
Hong Kong has progressed impressively in terms of economic dynamism, despite
starting from a very high base, with rising levels of inward FDI. In fact, the United
Nations World Investment Report 20194 shows that only the US and China have
higher levels of global FDI inflows than Hong Kong, reflecting Hong Kong’s role
as a gateway to China.
The US-China trade dispute and Unlike some of its neighbours, Hong Together with Hong Kong’s recent
current social unrest in Hong Kong Kong is not benefitting from diverted progress on trade digitisation, its active
is taking its toll on the territory’s US demand and is suffering from falling involvement in the BRI and the Greater
short-term growth outlook. Standard exports to both the US and China. Bay Area developments, they should
Chartered GDP forecasts have been help the city weather the storms and
lowered to reflect trade headwinds: In view of this, the government has uphold its position as a regional
the US-China trade tensions are hitting launched a basket of measures to trading hub.
Hong Kong hard due to its position as support small and medium-sized
a re-export hub. enterprises.
The Standard Chartered view on Hong Kong
Corporates continue to see Hong Kong as a procurement centre
to access suppliers from across Asia. The local regulator is pushing
the trade digitisation agenda by bringing together companies and
finance providers into a single platform (eTradeConnect), which
enables buyers and suppliers to provide trade transaction visibility to
their finance providers, hence reducing the risk of fraud and double
financing and giving SMEs better access to finance.
Belinda Han
Regional Head of Trade, Hong Kong
4 The United Nations Conference on Trade and Development World Investment Report 2019:
https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2460
16Standard Chartered Trade20: the rising stars of global trade
Africa
Côte d’Ivoire and Kenya stand out as opportunities for corporates and
governments strengthening their trading relationships with Africa.
Africa boasts some of the rising stars Côte d’Ivoire and Kenya have
of the Trade20: Côte d’Ivoire leads significantly improved in trade readiness,
the index, with Kenya close behind demonstrating that investments in
and Ghana just outside the top 10. infrastructure and business environment
Although these are smaller economies improvements are paying off. Côte
that cannot be expected to match the d’Ivoire and Ghana also fare well for
overall trading potential of larger trading economic dynamism, with Côte d’Ivoire
powers, our index shows that they are enjoying robust GDP and export growth
progressing quickly, albeit from a low and Ghana seeing an influx of FDI.
starting point.
Figure 7: Trade growth potential of Côte d’Ivoire, Kenya and Ghana: radar chart highlighting the
impressive trade readiness improvements in these African economies
Diversity
100
80
60
40
20
Readiness Dynamism The index suggests that Kenya is
consolidating its position as the trading
hub of East Africa, while Abidjan, Côte
d’Ivoire’s economic centre, is assuming
the mantle of West African trading hub.
These markets are placing themselves
in an excellent position to benefit from
Côte d'Ivoire ○ increased trade flows and foreign
investment.
Kenya ○
There is still a journey ahead, however.
Ghana ○ Excepting Ghana, the African markets
in our index show limited improvement
in terms of inward FDI flows, suggesting
that most markets need to do more
to encourage and reassure overseas
investors. Building strong institutions and
improving the ease of doing business are
critical in this respect.
17Standard Chartered Trade20: the rising stars of global trade
Spotlight on Côte d’Ivoire:
Leader of the pack
Côte d’Ivoire is propelled to the top of the Trade20 by improved potential in terms
of trade readiness and economic dynamism. The largest economy in francophone
Sub-Saharan Africa, Côte d’Ivoire has emerged from instability and political crisis to
achieve impressive GDP growth for the last seven years.
In the 2020s, Standard Chartered its port and airport, cementing its while GDP and export levels have
expects the market to join the so-called position as a key business hub for been on an upward trend, there has
‘7% Club’: the group of economies West Africa. Increased government been limited progress in terms of
sustaining a GDP growth rate of 7 per spending has boosted the market’s inward FDI, which could dampen its
cent or more, which means they could manufacturing industry and the trade growth potential.
double in size in a decade. administration is also making efforts
to improve the overall business climate. Despite this, Côte d’Ivoire’s trade
Compared to other African economies, growth momentum overall suggests
Côte d’Ivoire has relatively developed However, our research suggests that that it could be on track to a greater
infrastructure. Abidjan, the market’s foreign investment is where Côte trade performance.
major urban centre, has been expanding d’Ivoire needs to pick up momentum:
Spotlight on Kenya:
Infrastructure investments paying off
Kenya places near the top of the Trade20. The market’s impressive potential for
trade growth suggests that the government’s ‘Big Four’ development initiative –
focusing on boosting manufacturing activities, achieving universal health coverage,
improving food security and supporting the construction of affordable housing – is
driving Kenya’s increased trade growth potential.
Kenya’s trade readiness score is reforms, including in the areas But Kenya’s ability to refinance debt
particularly high, due to infrastructure of starting a business, access to obligations through commercial
and ease of doing business electricity, registering property borrowing suggests investors are not
improvements that far surpass most and protecting minority investors. yet overly concerned about rising
other African nations in our index. The debt levels or rising share of budget
administration has been successful The market’s key development revenue allocated to debt servicing.
in attracting external investment for challenges include poverty, Nevertheless, ensuring healthy public
substantial infrastructure development, inequality, climate change and rising finances remains essential.
including renewable energy projects. debt levels. And Kenya’s loan rate
cap has made it more difficult for
Improvements in Kenya’s ease of doing small and medium-sized businesses
business ranking over the last few years to access credit, which has
have been driven by governmental weakened private-sector growth.
The Standard Chartered view on Africa
Home to some of the world’s fastest-growing economies, Africa has the potential to become a much bigger player on the
global trade stage. Already connected with the trading powers in Asia, particularly China, through the Belt & Road Initiative,
and with the launch of the AfCFTA, we see numerous growth opportunities for trade and investment in the years ahead.
Additionally, the growing young, digitally-savvy population and an increasing female workforce will aid in the continent’s
economic transformation.
Philip Panaino
Transaction Banking Head, West
18Standard Chartered Trade20: the rising stars of global trade
Middle East
Diversification away from oil boosts potential.
In an era of low oil prices, many Middle Eastern governments are working hard to
diversify their exports and upgrade their infrastructure. The Trade20 index points
to the Middle Eastern markets that are doing this most successfully, making their
economies more robust and less vulnerable to oil price volatility, and putting them
in a better position to attract foreign investment.
Figure 8: Trade potential of Oman, the UAE, and Bahrain:
radar chart highlighting these Middle Eastern economies’ strong
performance in increasing export diversity, and the
UAE’s particular progress in trade readiness
Diversity
100
80
60
40
20
Readiness Dynamism
Oman ○
UAE ○
Bahrain ○
19Standard Chartered Trade20: the rising stars of global trade
Three Middle Eastern markets achieve Several Middle Eastern markets fishing and mining, capitalising on
a place in the Trade20: Oman, the are also showing impressive trade its natural resources. The government
UAE and Bahrain. The performance of readiness momentum, propelled has also been making efforts to
these economies is powered by fast by infrastructure investment and an reduce the barriers to doing business,
progress in economic diversity, pointing e-commerce market that is rapidly streamlining the start-up process and
to the Middle Eastern markets that are gathering pace. making border clearance easier.
making strides to expand their exports
beyond oil. This is becoming even more The UAE leads the way here, showing While the region shows strength in
pertinent as tensions in the Persian Gulf swifter progress than any other Middle terms of increasing export diversity
escalate, which could impact oil prices Eastern nation, due largely to the and trade readiness, Middle Eastern
and threaten the trade growth of these government’s energetic focus on markets tend to perform relatively
nations. Oman and Bahrain in particular infrastructure improvements. The UAE poorly in terms of economic
need to prioritise their diversification government’s ambitious Vision 2021 dynamism, due to limited GDP and
agendas, as they have greater external focuses on enhancing infrastructure, export growth and a lack of inward
vulnerabilities: lower oil wealth, rapid providing grants for road, bridge, FDI momentum. But the index points
accumulation of debt, and questions harbour and dam development and to the Middle Eastern markets that
over the sustainability of their increasing investments in water and are successfully laying the foundations
currency pegs. electricity projects. for future trade performance
improvements, whether in the form
Bahrain is a leader in terms of Oman is showing progress in terms of Oman and Bahrain’s diversification
improving diversification, indicating that of both economic diversity and away from oil, or the UAE’s
long-term efforts to move its economy trade readiness. It is implementing improvements to trade readiness.
away from a reliance on oil and develop a diversification strategy that aims
its manufacturing, finance and services to focus on non-oil sectors such as
sectors are paying off. manufacturing, logistics, tourism,
The Standard Chartered view on the Middle East
There are tremendous opportunities arising from the modernisation
and diversification that we are seeing throughout the Middle East, all
of which will help to improve the region’s bid to become a financial
and investment hub.
The UAE’s position in the middle of Asia and Africa helps to connect
these important financial and trade corridors with the Middle East.
Substantial opportunities are on the horizon, including those arising
from the closer relationship between the UAE and China through the
Belt & Road initiative.
Khurrum Zaeem
Trade Head, UAE & MENA and Transaction Banking Head, UAE & MENA
20Standard Chartered Trade20: the rising stars of global trade
Europe
Ireland leads the way with strong
economic dynamism.
With highly developed economies, closely integrated
markets and low long-term growth prospects, the space
for European markets to grow their trade potential further
is limited. However, Ireland bucks this trend as the only EU
member to appear in the Trade20 – propelled up the index
by its improvements in economic dynamism. This reflects
its remarkable recovery from the global financial crisis and
its success in attracting foreign investment. Ireland’s low
corporate tax rates, pro-business legislation and well-
educated, English-speaking population have made it a
magnet for multinationals in the last few years. However,
the possibility of the UK making a disorderly exit from the
EU poses a significant risk to the Irish economy in the Diversity
short to medium term.
100
Other European markets that appear in the Trade20
are non-EU economies Russia, Switzerland and Turkey. 80
Russia’s performance is powered by progress in economic
diversity and trade readiness, reflecting infrastructure 60
improvements and some success in moving the economy
away from an over-reliance on oil and gas exports. Despite 40
facing some short-term economic risks from geopolitical
tensions with the US over arms sales from Russia and 20
ongoing disputes with Cyprus and the EU over offshore
gas deposits, Turkey is moving fastest in terms of trade
readiness, driven by e-commerce improvements.
Figure 9: Trade growth potential of Ireland, Readiness Dynamism
Russia, Switzerland and Turkey: radar chart
showing the performance of these economies
in the Trade20 index
Ireland ○ Switzerland ○
Russia ○ Turkey ○
The Standard Chartered view on Europe
Our study shows that the opportunity for developed economies in the West is to increase focus on trading with
markets exhibiting strong growth in trade as a result of increasing dynamism, readiness and diversity of their
economies. Increased protectionism is resulting in emerging economies grabbing a greater share of global trade.
Companies in the West have an opportunity to focus more on these dynamic trade corridors.
Michael Vrontamitis
Head of Trade, Europe & Americas
21Standard Chartered Trade20: the rising stars of global trade
The Americas
All-rounder Chile is the only market in the Americas to appear in the Trade20
There is an almost complete absence While the index reveals that the Its economic dynamism progress is
of economies from the Americas in the potential for increased trade is generally driven by increases in inward FDI, while
Trade20. Some markets in this region strongest in the global south, Latin its greater trade readiness is propelled
– such as the US – are starting from a America is a notable exception. In fact, by infrastructure and e-commerce
higher point, so it is difficult for them to Chile is the only market in the Americas improvements. The market is benefiting
show substantial improvement, while to appear in the Trade20. Chile is from trade-focused economic policies,
other economies in this region may showing some progress in terms of infrastructure upgrades and a fast-
be struggling to match the speed of export diversity, economic dynamism growing e-commerce market.
progress of other markets. and trade readiness.
Figure 10: Trade potential of Chile: radar chart illustrating the Latin
American market as one of the Trade20’s all-round performers
Diversity
100
80
60
40
20
Readiness Dynamism
Chile ○
Trade is a priority for the current market’s trade growth potential and doesn’t appear in the Trade20. Despite
Chilean government, which is making put it in a better position to mitigate the this, it does perform well in economic
efforts to cut red tape and increase impact of falling copper prices and the diversity, showing that it continues to
foreign investment. However, Chile’s fallout of the US-China trade dispute. expand the breadth and range of its
trade readiness is hampered by a lack exports, like many of the developed
of improvement in its ease of doing As the world’s largest economy and economies in our index.
business ranking. This suggests that an existing trade superpower, the US
additional pro-business legislation starts from such a high base that it has
could be a lever to increase the limited room for growth and as such it
22Standard Chartered Trade20: the rising stars of global trade
Pillar rankings
The overall Trade20 index reveals the 20 global economies that are most rapidly
improving their trade growth potential. Rankings are based on 66 markets’
performance against three equally weighted pillars: economic dynamism, trade
readiness and export diversity. When we examine each pillar in isolation, alternative
rankings emerge. The top 20 pillar rankings therefore provide a snapshot of the
markets that have progressed particularly well in one dimension of trade growth
potential, including markets which do not rank in the overall Trade20 index.
Economic dynamism
Economic dynamism measures the with Ireland’s influx of FDI pushing swift progress from a relatively low
economic performance of a market, it to the top of this index. Financial base. The Philippines – a market that
measured by an increase in foreign hubs Singapore, Hong Kong and Standard Chartered predicts could join
direct investment (FDI), as well as Switzerland also take top spots, the so-called ‘7% Club’, with a GDP
export and GDP growth. reflecting their continued increase in growth rate at 7 per cent or more over
growth and investment, despite their the next decade – also ranks highly in
The markets that show the most high starting points. this pillar.
improvement in economic dynamism
include a combination of emerging In terms of emerging markets, Ghana
markets and developed economies, and Côte d’Ivoire perform well, making
Table 1: Economic dynamism ranking
Ireland UK
Singapore Malaysia
Hong Kong Saudi Arabia
Switzerland Sierra Leone
Ghana Mexico
Côte d'Ivoire Tanzania
Philippines Gambia
Chile Peru
Netherlands Spain
Vietnam France
23Standard Chartered Trade20: the rising stars of global trade
Trade readiness
Trade readiness reflects the extent to Many emerging markets are moving only exceptions. Trade giants China
which a market has the foundations swiftly to improve their trade readiness, and India place highly, reflecting large-
to support future trade growth. It is reflecting the fact that governments scale infrastructure upgrades and
measured by improvements to physical are making it easier to do business regulatory overhauls, but smaller trading
and digital infrastructure, e-commerce and upgrading infrastructure. Markets economies including Côte d’Ivoire,
and ease of doing business. in Asia and Africa dominate the Kenya and Vietnam also score well.
top 10, with the UAE and Russia the
Table 2: Trade readiness ranking
China Bangladesh
Kenya Nigeria
India Cameroon
Côte d'Ivoire Ghana
Indonesia Jordan
Vietnam Oman
UAE Uganda
Russia Colombia
Thailand Tanzania
Sri Lanka Saudi Arabia
Export diversity
Export diversity reflects a market’s to market pressures. Middle Eastern enable them to continue building their
progress in its breadth of exports. It is markets have made strides here – albeit export diversity. The continuing pace of
measured by the variety of products from a relatively low starting point – with diversification of developed economies
exported and how export revenue is Bahrain, Oman and Qatar performing like the Netherlands, Spain and the UK
spread across that product range. The well due to efforts to move away from a represents momentum in Europe that
markets that rank highly for diversity reliance on oil exports. is sustainable in the long term, because
have made the most progress in terms the value of these markets’ exports is
of diversifying their exports, which is European markets also score well for shared by a diverse – and increasing –
likely to open new prospects for trade export diversity. These mature markets range of industries.
growth and make them less vulnerable have developed export structures that
Table 3: Export diversity ranking
Bahrain Germany
Oman UAE
Hungary USA
Qatar Italy
Russia Singapore
Netherlands Czech Republic
South Africa France
Spain Poland
UK Korea
Belgium Austria
24Standard Chartered Trade20: the rising stars of global trade
Conclusion
Predicting the future is impossible, especially in these uncertain times.
But the Trade20 index maps the rising stars of trade, identifying the markets
where the trade environment – and trade growth potential – has been
improving most rapidly over the past decade.
The index shows that a diverse Against a backdrop of rising By highlighting the markets that are
range of economies have made protectionism and trade tensions, this most successfully improving the
improvements to their trade potential, more positive story of infrastructure potential for their trade to grow, the
setting them up for future trade improvements and business-friendly Trade20 index shines a spotlight on
growth. While trade giants China policy platforms is encouraging. We both fast-paced emerging markets and
and India show rapid progress even would add that while we have seen existing trading hubs that continue on
from an already-high starting point, higher tariffs as a result of the US- a path to increased trade.
established exporters like Vietnam, China trade dispute, the EU is busy
Indonesia and Thailand are also concluding trade agreements around The markets that are demonstrating
improving as are smaller economies the world while several regional trade this impressive pace of progress may
such as Côte d’Ivoire, Kenya, Ireland agreements are recently agreed or represent interesting opportunities for
and Oman. under negotiation. corporates seeking new investment,
import and supply chain partners.
Healthy trade is
fundamental to
economic growth
and global prosperity.
These rising stars
could hold the key.
25Standard Chartered Trade20: the rising stars of global trade
Detailed methodology
Trade20 examines the progress made across 12 metrics by 66 economies – the
leading global economies plus the major economies in each region (Asia-Pacific,
Africa, Europe, the Middle East and the Americas) – to reveal the 20 economies that
are most rapidly improving their trade growth potential.
Individual market perspectives Change orientation
All measures of potential are unique to While most traditional trade indices consequence of faster trade growth
individual economies and no data in this are based on a market’s present rather than a cause. Improvement in our
study is designed to reflect global trade performance, our index captures three pillars should support faster export
growth potential at large. By its nature, changes over time to reveal the growth and, in turn, higher imports are
the research will inevitably group small markets that have seen the most likely to follow higher exports. We do
and large economies together and as improvement in the past decade include export growth in the index under
such it does not reflect absolute trade (see note on variable timescales on the dynamism pillar, because sometimes
growth potential, something that will be page 28). This enables us to identify past momentum can be an indicator of
far larger in markets with higher GDP. the economies showing recent positive future performance, though it only has
Rather, it suggests the potential for an developments and point to where a small weight. Greater trade potential
individual economy to grow its trade. heightened potential may suggest a in a market presents opportunities for
As the metrics capture change over a future acceleration in trade growth. companies worldwide to trade and
period of time, markets that have made The research features markets growing invest. A high ranking also suggests a
improvements very recently may not from both low and high starting points market that is improving as a possible
yet appear near the top of the index. based solely on their progress, even outsourcing location.
Economies that do not appear near the when they might have very different
top of the ranking do not necessarily sized economies in absolute terms.
have poor trade growth potential – they
may be starting from a high base, so We have not included import growth
have less room to grow. in our index as we see imports as a
Three pillars
We have determined each market’s potential for trade growth • E-commerce
by analysing changes across a wide range of variables, ‒‒ Proportion of population that has made
grouped into three pillars. These three pillars are detailed below, digital payments in the past year
along with the data behind each: ‒‒ Integrated index for postal development
‒‒ Proportion of population that is using the internet
• Economic dynamism – the current momentum in trade • Ease of doing business score
growth potential as measured by:
• Inward stock of FDI • Export diversity – a market’s progress in its breadth of
export diversity, as measured by:
• Growth
‒‒ Export volume growth • Export count (count of HS six-digit export product lines)5
‒‒ GDP growth • Export diversity (HH index of export product lines)6
• Trade readiness – the extent to which a market has the Each of the three pillars is equally weighted. The layout
foundations to support future trade growth, as measured by: is reflective of the make-up of the pillars. For a detailed
• Quality of trade and transport infrastructure explanation of how the 12 weightings add up to the complete
• Quality of digital infrastructure index please refer to Table 4.
‒‒ Proportion of population with access to broadband
‒‒ Secure internet servers per million people
5 Harmonised Commodity Description and Coding System
6 Hirschman-Herfindahl Index (a measure of export concentration)
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