Q3 2018, Supply Wisdom Index: Location Risk Monitor

///Q3 2018, Supply Wisdom Index: Location Risk Monitor
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Q3 2018, Supply Wisdom Index: Location Risk Monitor

Q3 2018 Supply Wisdom Index: Location Risk Monitor covers global outsourcing markets and ranks key locations based on the Composite Risk score, a comprehensive measure of important risk criteria.
Ten major outsourcing markets have been analyzed in this index using the Supply Wisdom
TM framework, covering risk categories such as Geo-Political, Financial, Scalability, Legal, Business, Infrastructure, Macro-Economic, and Quality of Life.


Q3 2018 Country in Focus:

Philippines

  • In September 2018, Philippine’s inflation rate increased for the fourth straight month to a 9-year high of 6.7%, which compelled the country’s Central Bank to raise its key interest rate by 50 Basis Points to 4%. During September 2018, Philippine peso also weakened to near 13-year low.
  • During August 2018, the second package of tax reforms bill aimed to “modernize” fiscal incentives and reduce the corporate income tax rate, was approved by the Philippines’ House Committee. The bill is named as Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) and is a substitute bill for ‘Tax Reform for Acceleration and Inclusion (TRAIN) Package Two’.
  • During the quarter, the country witnessed several natural disasters in the forms of typhoons, heavy rainfalls, and floods. ‘State of Calamity’ was also declared in parts of Philippines including Marikina City amid heavy rains. Traffic disruptions due to floods were reported across the country. Metro Manila also reported rise in leptospirosis cases.
  • Metro Manila was on high alert during the period due to multiple bomb explosion reported in Southern Philippines. The first explosion was reported on August 29 in Sultan Kudarat, Mindanao causing two causalities and more than 35 injuries. It was followed by two more explosions during September 2018.


Click on any country for more information.


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Rank Country

Overall Risk Score
Q3 2018 Q2 2018
#1
China
0 4.14 4.13

Infrastructure investment continued to be the major driving force for China’s economic growth. The Chinese government has set sights on increasing the length of high-speed railways in operation to 30,000 kms by 2020, connecting more than 80% of its big cities. On the geo-political aspect, the risk from natural disasters persisted.  The recurrence of typhoons affected millions of people causing heavy economic losses across the country.

Quality of Life
Quality of Life Risk declined as the cost of living index recorded a drop during the quarter.
Geo-Political
Geo-Political Risk moved upward driven by increased risk from floods and typhoons during the quarter.
Macro-Economic
Macro-Economic Risk decreased during the quarter primarily driven by improved trade balance surplus.
#2
India
0 4.17 4.19

India recorded it’s fastest economic growth at a 2-year high of 8.2% during the April-June quarter. During the period, technology companies such as HCL, Infosys, and Tech Mahindra announced their expansion plans in the country. However, high fuel prices and declining rupee are key challenges that continued to affect the country.

Macro-Economic
Macro-Economic Risk witnessed a notable increase during the quarter owing to rise in inflation rate and decline in forex reserves.
Geo-Political
Geo-Political Risk declined mainly due to improvement in political stability.
Infrastructure
Infrastructure Risk dropped driven by major infrastructural developments such as expressways, expansion of roadways etc.
#3
Poland
+4 4.61 4.71

Poland has witnessed tremendous growth in its services sector owing to its strategic access to western European markets, a developed labor pool, and cost advantages. The country is focused on its infrastructure development and the European Union to invest around US$370 M into Poland’s road infrastructure. With respect to the geopolitical front, the Risk associated with social unrest remained high due to frequent protests.

Macro-Economic
Macro-Economic Risk witnessed a decrease due to less volatility of Polish złoty.
Geo-Political
Geo-Political Risk declined mainly due to improvement in political stability.
Financial
Financial Risk remained Moderate. Rental growth across most office markets remained stable with nominal increase for prime office spaces.
#4
Ireland
-1 4.64 4.71

Ireland witnessed several protests during the quarter due to the housing crisis. With respect to natural disasters, the country witnessed several storms and gales which disrupted traffic and power supply in parts of the country. On a positive note, several companies such as Microsoft, Qualtrics, and Neueda Technologies announced their expansion plans in the country.

Macro-Economic
Macro-Economic Risk reported a notable decrease during the quarter driven by high GDP growth rate.
Financial
Financial Risk witnessed a downtick due to decrease in fuel prices.
Legal
Legal / Security And Compliance Risk moved downward due to decrease in tax policy risk.
#5
Philippines
-1 4.82 4.79

Philippine’s inflation rate increased for the fourth straight month in September 2018 compelling Central Bank of Philippines to raise its key interest rate. During the period, peso also weakened to near 13-year low. On geo-political front, Metro Manila was on high alert due to multiple bomb explosions in Southern Philippines. The country also reported several natural disasters in the form of typhoons and floods.

Geo-Political
Geo-Political Risk increased during the quarter due to frequent terrorist attacks in the Southern Philippines and natural disasters.
Macro-Economic
Macro-Economic Risk witnessed an increase during the quarter driven by the increase in inflation and interest rates.
Financial
Financial Risk reported a minor drop due to decline in rental growth rate.
#6
Mexico
-1 4.89 4.86

After a prolonged negotiation process, Mexico and US agreed to replace NAFTA deal with new “United States-Mexico-Canada Agreement (USMCA)” during the quarter. In July 2018, the United States government issued its highest-level travel warning to the Mexican states Colima, Guerrero, Michoacán, Sinaloa, and Tamaulipas citing violent crimes.  The homicide rates in the country surged by 16% in the first half of 2018 compared with same period in 2017.

Macro-Economic
Macro-Economic Risk witnessed an increase driven by widening budget deficit and trade deficit.
Geo-Political
Geo-Political Risk climbed up slightly during the quarter, triggered by heavy rainfall in parts of the country.
Quality of Life
Quality of Life Risk moved upward as several weather alerts were issued due to heatwaves in parts of the country.
#7
Brazil
+2 4.97 5.00

Brazil’s economy grew by 1% in Q2 2018, thereby recording its slowest expansion since Q2 2017.  On the other hand, the inflation rate surged to 4.53% in September 2018, the highest since March 2017, primarily driven by an increase in food and oil price. Nevertheless, it remained within the central bank’s target range of 4.5% plus or minus 1.5% points. On the geo-political front, the Risk associated with social unrest & epidemic outbreak remained high due to an increase in the cases of measles in the country.

Macro-Economic
Macro-Economic Risk climbed up driven by widening budget deficit and increased inflation rate.
Financial
Financial Risk for the quarter recorded a decline due to the drop in rental growth rates.
Geo-Political
Geo-Political Risk declined as no major floods or storms were reported for the quarter.
#8
Colombia
-2 5.03 4.87

Colombia recorded a 4-year low inflation rate of 3.12% in July 2018, following a slight increase in June. Nevertheless, it remained within the central bank’s target rate of 2% to 4%. On the geo-political front, the country witnessed an eruption of ‘Nevado del Ruiz’ volcano with ash fall reported across the region of Manizales. Furthermore, the risk from natural disasters in the form of floods and landslides and drug cartel crime posed a serious threat to the geo-political stability of the region.

Macro-Economic
Macro-Economic Risk reported a minor decrease owing to slight decline in government debt.
Geo-Political
Geo-Political Risk increased significantly due to the volcanic eruptions recorded during the quarter.
Infrastructure
Infrastructure Risk declined notably during the quarter driven by improved internet speed.
#9
Vietnam
-1 5.12 5.13

Infrastructure has been identified as one of the top priority areas by the Vietnamese government. Special Economic Zones and Business Parks have been planned in the country to attract more investments and to support the expansion of IT outsourcing sector. On the geo-political front, the country was affected by floods and landslides. Also, rising number of vector-borne diseases remained a cause of concern.

Macro-Economic
Macro-Economic Risk reported decline owing to increase in foreign investments and forex reserves.
Financial
Financial Risk witnessed a drop driven by a drop in rental growth rate.
Geo-Political
Geo-Political Risk remained Moderate as no major protests/strikes were reported during the quarter.
#10
Hungary
0 5.19 5.28

Hungarian economy advanced at a faster 4.8% during April-June quarter, higher than preliminary estimate of 4.6%, boosted by investments. Further, in the month of September, the government recorded budget surplus. On the flip side, businesses operating in the country remained vulnerable to high risk of cyberattacks.

Macro-Economic
Macro-Economic Risk decreased during the quarter as the government recorded a budget surplus in the month of September.
Financial
Financial Risk witnessed a downtick driven by drop in rental growth rate.
Infrastructure
Infrastructure Risk remained Low. There were no reports of any major power outages during the quarter.

About the Author: Supply Wisdom Locations Team

11-04-2018|Country Risk Index0 Comments