New research from Standard Chartered has shown the extent to which Asia is currently leading the world in trade growth potential, while the emerging markets of Latin America fall behind.

The Trade20 index, released last week at Sibos in London by the bank, identifies the potential for trade growth in each global economy by analysing changes across three pillars: economic dynamism, as measured by inward stock of FDI, export volume growth and GDP growth; trade readiness, as measured by a country’s ease of doing business score, its level of e-commerce penetration and the quality of trade, transport and digital infrastructure; and export diversity.

Emerging markets feature heavily in the index, which judges the potential for an individual economy to grow its trade rather than outright trade potential, but Latin America is a notable exception, with Chile the only market in the region to appear in the Trade20, propelled by infrastructure and e-commerce improvements that its neighbours are struggling to achieve.

Almost half of the index is made up by Asia, with India, China, Vietnam, Indonesia, Thailand, Hong Kong, Sri Lanka, Singapore and the Philippines making it into the top 20.

The report says that while there is currently a focus in the region on US-China trade tensions, overall these markets are benefitting from regional trade deals, physical and digital infrastructure investments, and increasing openness, adding that the scorecard points to accelerated Asian trade growth potential, with particularly impressive performances by Vietnam, Indonesia and Thailand.

Crucially, exposure to China is a key factor in the high rankings of developing Asia Pacific markets in the Trade20 index. With only a few exceptions, the higher the trade growth with China, the better these markets perform in terms of economic dynamism.

“Amid global challenges, Asean economies are showing remarkable strength, focusing on trade digitisation and regional connectivity,” says Ricky Kaura, head of transaction banking, east, at Standard Chartered. “The Vietnamese economy is the fastest-growing in the region, a clear indicator of the benefits the country is reaping from an open economy. Thailand has also been focusing on digitising processes and increasing efficiency across industries and activities. In Indonesia, export is a key focus, and export growth has been steadily increasing year-on-year. These markets look set for continued growth as they continue to improve their trade readiness and grow intra-Asean trade.”

Meanwhile, the Latin America and Caribbean region has seen export growth slow of late, with a recent report by the Inter-American Development Bank (IADB) showing the region exported US$1.08tn-worth of goods last year, up 9.9% on 2017. This was a good way below the 12.2% increase between 2016 and 2017 and fell short of the 11.6% global export growth figure.

The region’s exporters are still struggling with tumbling commodity prices, which show no sign of improving amid increased geopolitical uncertainty, including rising trade tensions, policy changes and trade barriers.

Lacklustre intra-regional trade is another stumbling block to export growth, with IMF figures showing only about 15% of total exports from Latin America are destined to regional markets, as compared to around 50% of exports from Asia and Europe, due in part to the region’s reliance on commodities in its export basket.

Although Chile is showing some progress in terms of export diversity, economic dynamism and trade readiness, the Trade20 index is a clear indicator of just how much work the region has to do if it is to keep up with its more dynamic counterparts in Asia.