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Asia to drive global trade expansion to US$68.5 trillion
Asia should underpin the growth of global trade during the coming decades with trade between the economies in the region projected to grow from 17% of the total global exports in 2015 to 27% in 2050.
Chito Santiago 25 Nov 2015

Asia should underpin the growth of global trade during the coming decades with trade between the economies in the region projected to grow from 17% of the total global exports in 2015 to 27% in 2050.

 

According to the new forecasts in HSBC's Trade Winds report, released on November 24, Asia will be the starting point for a quadrupling of the worldwide exports to an estimated US$68.5 trillion by 2050. It says Asia-Pacific's share of the global exports is projected to rise from a third in 2015 to 46% in 2050. In contrast, the share of Western Europe is expected to shrink from 34% to 22% during the same period, while that of North America is forecast to fall from 11% to 9%.

 

The report says the surge in global trade will mark a third wave of globalization anchored by new technologies and increasing economic integration. "The centre of gravity of global trade is expected to continue to shift to the east as trade growth within Asia increases," it points out. "Many of these economies should benefit from continued cost competitiveness, favourable demographics - a young and growing work force, for example - and the increase of average incomes towards levels seen in the advanced economies."

 

HSBC's regional head of commercial banking for Asia Pacific Paul Skelton says the importance of trade's contribution to global growth and prosperity cannot be underestimated. "Asia's position at the leading edge of technological and supply chain innovation gives the region a unique opportunity to benefit from this next wave of globalization," he adds.

 

China should extend its lead as the world's leading exporter, with its growing influence in Asia further extended by projects such as the One Belt, One Road initiative and the Asian Infrastructure Investment Bank, which aims to support trade growth by funding a range of infrastructure investments in the region.

 

India, the report adds, has also the potential for strong growth and is projected to outpace China. "We expect growth in merchandise exports from India to average 6% in 2025-2050, compared with just under 5% a year for China," it points out.

 

China, India and other developing countries will seek to maintain their growth, moving towards the production of higher value products and away from an over-reliance on exports. This will require significant investment, however, particularly to get more people and businesses online. Widespread internet penetration - ie, countries with more than 50% of the population connected - in 2015 is still mostly limited to mature economies with relatively high per capital incomes.

 

In 2014, only 18% of the Indian population and 50% of the Chinese population had an internet connection. "By 2025, we expect to see a huge increase in internet users in the developing world, particularly in fast-growing urban areas," the report says.

 

The report identifies four "trade winds" that will drive opportunity for the business leaders of today and tomorrow: the march of industrialization and a shift to mass customization; plummeting transport and logistics costs; further liberalization of trade policy and the evolution of more nimble business operating models.

 

"Over the next 35 years, the four trade winds will continue to drive innovation and new thinking to help companies thrive and compete in a highly volatile and fast-paced global market," the report says.

 

Meanwhile, as the continued globalization of trade brings much promise, it also poses major challenges to businesses, governments and individuals. In the next 35 years, the report identifies the potential risks to the global system that could negatively impact trade and these include: national security risk, terrorism; cyber security; pandemics; geopolitical uncertainty and instability; economic crises, recession or even periods of low growth; regulatory requirements on local economies and industries, countries returning to protectionism, climate change; and political reaction against the perceived negative impacts of globalization (ie, growing inequality).

 

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