New patterns of trade in Asia-Pacific


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We project the economies of East and Southeast Asia to capture a larger share of global trade over the next 10 years as their expansion outpaces that of developed nations.

The rise of the middle class in Asia means that companies must produce a greater share of goods within the region.

While fragmentation of production processes across countries will continue to drive regional export volume, the rise of the middle class in Asia means that companies must produce a greater share of these goods within the region to satisfy demand within Asia.

We expect US to remain the world’s largest consumer market in 2020, making it an important destination for export expansion by Asia-Pacific firms. Despite the global economic shift toward the East, markets outside the region still represent attractive opportunities for Asia-Pacific exporters due to their size.

Our forecasts also highlight the growing importance of new markets in Africa and the Middle East. Our forecasts suggest the expansion of exports from most Asia-Pacific economies to these regions to be greater in value than the increase in trade to the Eurozone.

The machinery and transport equipment sector will mainly fuel this growth in exports from most Asia-Pacific rapid growth markets. ICT equipment will be the most important component of this growth, as the regional economies move up the value chain into high-technology goods.

Vietnam and Indonesia are the only two economies where low-end manufacturing mainly drives growth, reflecting their late adoption of export-oriented industrialization strategies.

Over the next decade, exports of services will increase strongly, in part driven by increased demand for services in home markets, as the population grows wealthier.

We project the cross-border markets for business and financial services to be vibrant over the next decade, with strong financial centers such as Hong Kong strengthening and consolidating their positions.

Alternative scenarios

Given the uncertainties inherent in any forecast, we consider two alternative scenarios for the evolution of trade in Asia:

  1. A faster-than-baseline growth in Asia’s middle class would generate a virtual circle of growth in the region, feeding higher levels of intra-regional trade.
  2. One country’s more rapid move up the value chain, beyond the baseline (China, for example), would lead to a decline in intra-regional trade levels, as more components of the supply chain for high-technology products would be within China.

The rapid growth of the consumer market in Asia represents a significant opportunity for multinationals that are able to interpret these trends as well as the possible alternatives, and adapt their business strategies to cater for Asian tastes and preferences.

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