Prospects for future trade growth ‘surprisingly positive’ despite headwinds: DHL Trade Growth Atlas

PROSPECTS for future trade growth still remains “surprisingly positive” and is indeed expected to grow slightly faster in 2022 and 2023 than it did over the previous decade, according to the DHL Trade Growth Atlas.

“The trade landscape is shifting and presenting new challenges, but this report strongly rebuts predictions of a major retreat from global trade,” said Steven Altman, senior research scholar and director of the DHL Initiative on Globalization at New York University Stern’s Center for the Future of Management.

Indeed, the 2022 to 2023 average is expected to come in at 3.7 per cent according to forecasts from the International Monetary Fund. This compares with 3.3 per cent on average for the period of 2012 to 2019 and 2.8 per cent for the period of 2012 to 2021 said Altman on Sep 15 at the launch of the report.

Meanwhile, John Pearson, chief executive of DHL Express noted that global trade has been surprisingly resilient through the pandemic. Indeed, global trade expanded to 10 per cent above pre-pandemic levels even in the face of significant supply constraints.

That being said, a return to the pre-2008 pattern of trade regularly growing twice as fast as world GDP is “unlikely” over the near-to-medium term noted Altman, the lead author of the report.

“There is still ample scope for further trade expansion, which would help accelerate global economic growth, but medium-to-long term trends point more to slowbalisation than to either a return of hyperglobalisation or a reversal to deglobalisation,” he said.

The report also found that trade growth is spreading out across a wider variety of countries.

From 2016 to 2021, China generated one-quarter of the world’s trade growth. But based on the latest International Monetary Fund forecast, while China will still achieve the most trade growth from 2021 to 2026, its share of global growth will fall by half to 13 per cent.

The good news is that “new poles of trade growth” are emerging. Specifically, the latest IMF forecasts implies that over the next 5 years, Asean will achieve the fastest trade growth (5.6 per cent) , followed by South and Central Asia (5.0 per cent), and Sub-Saharan Africa (4.4 per cent).

SEE ALSO

US to discuss new chips bill with Taiwan next month

Altman also highlighted Vietnam, India and the Philippines as standouts on both the speed and scale of projected trade growth through 2026.

Vietnam’s trade growth is forecast to slow from 12 per cent during the last 5 years to 8 per cent over the next 5 years, bringing it down to 16th place on the speed ranking. The country is however predicted to fall only 3 places to 7th on the scale ranking.

India and the Philippines meanwhile stand out for their potential for a major acceleration in their trade growth. India’s trade volume growth rate is forecast to double from 3 per cent to 6 per cent, boosting its speed ranking from 72nd to 34th and its scale rank from 11th to 5th.

The Philippines is forecast to see its trade growth double, accelerating from 5 per cent to 10 per cent. This would boost the country’s speed rank from 31st to 9th and its scale rank from 32nd to 24th.