Growing Beyond

Beyond Asia

New patterns of trade in Asia-Pacific

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Over the next ten years, Asia will become the world’s fastest-growing consumer market.

Over half of Asian companies conducting a significant amount of business outside of Asia operate in the US.

Rising incomes will propel millions of Asians into the middle class, affecting not only intra-regional trade between rapid growth markets, but global trade as well.

Rapid growth markets in Asia-Pacific can benefit from expected trade growth in the region. Through vertical specialization, the contributions of these economies are increasingly complementary, enabling every country in the region to thrive.

For most Asia-Pacific economies, trade with the Middle East and Africa (MENA) will grow faster than trade to the Eurozone. Meanwhile, India will be the fastest-growing trade route for almost every economy in the region.

Overall, the US will remain the single largest growth opportunity for Asia- Pacific rapid growth markets. Our recent research found that more than half of Asian companies that conduct a significant amount of business outside of Asia are operating in the US.

Future trade patterns differ from sector to sector. For example, with the rise in per capita income (PCI), markets for many consumer goods are taking off. The boom in demand for consumer durables means that consumer product companies will need to differentiate their offerings to remain competitive.

Machinery and transport will dominate goods trade, with information and communications technology (ICT) equipment accounting for most of the growth. The shipbuilding industry will expand rapidly, benefiting countries such as South Korea.

By contrast, lower value-added products, including clothes and shoes, will primarily drive exports of manufactured goods from Indonesia and Vietnam.

Over the coming decade, trade in services exports is also set to increase sharply, with financial services showing particular dynamism. While the most vibrant financial centers in the region – Hong Kong and Singapore -— are likely to strengthen and consolidate their positions, we also expect emerging centers in Shanghai, Beijing and Seoul to grow rapidly.

We expect Asia’s rapid growth markets to increase their share of global consumption from 14% to 25% by 2020. But what would happen if Asia’s middle class expands faster than expected? How would this impact domestic demand and intra-regional trade?

In this report, we explore these questions and present a baseline forecast for patterns of trade in Asia by 2020, as well as two alternative scenarios, to help you as your strategic growth plans take shape. Read this overview or download the PDF for more detail.


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