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Home Business Insights

Five emerging global trade dynamics in the coming decade

FutureCFO Editors by FutureCFO Editors
January 24, 2024
trade

Photo by liorpt on istock

There are five emerging global trade dynamics in the coming decade, said Boston Consulting Group (BCG) recently.

Among these five emerging global trade dynamics, ASEAN countries would emerge as some of the biggest winners in the new world trade order.

The five emerging global trade dynamics
ASEAN Trade Growth. Southeast Asian nations are predicted to grow US$1.2 trillion in the next ten years due to its emergence as a key destination for companies seeking to decrease their dependence on China for manufacturing and sourcing, which is driving ASEAN’s growth as a platform for global exports. 

Strong fundamentals in the ASEAN region itself are also driving increased investment and trade activity.

China Trade Dynamics. Persistent trade tensions and increasing “managed trade” between China and the West are causing West-China trade to decelerate. 

The projected fall-off in US-China trade is one of the most significant developments in the updated global trade map, with 2032 trade value forecast to fall by US$197 billion from its 2022 level. China’s trade with the EU will continue to grow, but more slowly than the global average.

Stronghold North America. The United States, Canada, and Mexico will benefit from the US Mexico Canada Agreement (USMCA), as US trade with its neighbors is forecast to grow by $466 billion in the coming decade.

India ignition. India is benefiting from a low cost structure, increasingly capable workforce, and improving logistics to rise as a major domestic market and “China + 1” destination for global manufacturing. India is forecast to achieve 6.3% average annual trade growth, more than twice the global average.

Russian trade divergence. Much of Russia’s trade has been shifting toward fellow BRICs countries (Brazil, China, India, and South Africa). 

While Russia’s trade with China and India will grow by $134 billion and $26 billion respectively by 2032, its trade with the EU will fall by $222 billion.

China is today the world’s leading exporter of manufactured goods, but is slipping in relative cost-competitiveness and has a slowing domestic economy, said BCG. 

As non-Chinese firms re-evaluate their supply chain as a consequence, trade that stops flowing between China and the West will often move elsewhere, BCG noted. 

Notable beneficiaries of reduced concentration in China will be the ASEAN countries and India as many companies move manufacturing to these economies, both to reduce global supply chain risks and to access new markets, BCG pointed out. 

As a result, trade between ASEAN and China will grow an impressive $616 billion in the coming decade, and trade between ASEAN and both the US and Japan will also increase, by more than $200 billion, BCG predicted. 

“This is a not a blip. These changes in trade patterns are reshaping the global economy. Companies need to be thoughtful and decisive, or risk being caught out by fast-moving factors outside of their control,” said Michael McAdoo, BCG partner and director for global trade and investment and a coauthor of the report. “Those who are ahead of the curve are already investing to strengthen supply chain resilience, responding to volatility, and building up the right risk and cybersecurity capabilities.”

Related:  China sees record high urban unemployment rate amid Coronavirus outbreak
Tags: ASEANBCGChinaglobal tradeIndia
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