New Delhi: India and Asean bloc stand to gain as looming tariffs under the second Donald Trump administration in the US and geopolitical tension reshape global trade flows over the next decade, according to a Boston Consulting Group report.
World trade is projected to exceed $29 trillion by 2033, with India’s total trade growing at a 6.4% compound annual growth rate (CAGR) through 2033, reaching $1.8 trillion annually, in line with the country’s robust GDP growth, the report said.
India’s economic growth, combined with favourable policies aimed at boosting its manufacturing capabilities, positions it as a key player in the evolving global trade landscape, said the Boston Consulting Group (BCG) report. India's "China+1" strategy, which encourages companies to diversify supply chains beyond China, is expected to strengthen its position as a global manufacturing hub, particularly in sectors like electronics and consumer goods, it said.
“India is emerging as a major force in the Global South’s trade story as it builds favorable relations with the world’s leading economies,” said Nishant Gupta, managing director and partner at BCG India. “With its growing popularity as a production base for companies diversifying away from China, a skilled workforce, and rapidly improving infrastructure, India is set to become a preferred hub for global trade.”
With robust manufacturing capabilities, Asean nations are projected to see a 3.7% annual growth rate in trade over the next decade. The region’s trade relationship with China is expected to remain strong, growing 5.6% annually, while trade with the US and the European Union (EU) will moderate. This growth is largely attributed to geopolitical factors, such as ongoing US-China trade tensions, which have led many companies to relocate production to Asean countries.
The report outlines looming US tariffs as one of the most notable developments for trade. BCG estimates that a 60% tariff on Chinese consumer electronics would increase the cost of importing these goods by $61 billion. The imposition of tariffs is expected to particularly affect consumer electronics, electrical machinery, and fashion goods, industries heavily reliant on Chinese manufacturing.
BCG's report highlights that the trade routes through which goods move are undergoing remarkable changes. The Global Sout is expected to experience major shifts in its trade relationships, with India and Southeast Asia as key beneficiaries of production shifts caused by geopolitical rivalries.
Comprising 133 developing nations, the Global South represents approximately 62% of the world’s population and around 30% of global trade. Trade among these nations is projected to grow by $673 billion over the next decade, at a CAGR of 3.8% compared with 2.8% from 2017 to 2022. China’s trade with the Global South is expected to surge by $1.25 trillion, reflecting a broader shift toward South-South trade as China deepens its economic ties with emerging markets.
Meanwhile, the EU is reassessing its trade relationships amid growing geopolitical tensions, energy security concerns, and regulatory challenges. The EU’s trade with Russia is expected to decline by $106 billion by 2033, while its trade with the US is projected to grow by $303 billion, largely driven by imports of liquefied natural gas from the US. The EU is also expected to increase trade with emerging markets, especially India and Africa, as part of its strategy to strengthen global competitiveness, according to the report.
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