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Trade corridors in Africa, Asia and the Middle East are expected to grow faster than the global average, as momentum moves away from mature western corridors and high-growth routes emerge, research finds. 

Exports from the three regions are tipped to grow from US$9tn in 2021 to US$14.4tn by 2030, outpacing global trade growth by nearly 4%, according to a paper published today by Standard Chartered. 

Rapid industrialisation is set to establish strong export markets in South and South East Asia, while growing demand, stronger purchasing power and population growth will drive demand for imports across Africa, Asia and the Middle East, it says. 

“International trade is projected to move away from the west, shifting southward and outward,” the London-headquartered lender says. 

“South Asia will be the fastest growing export region, driven by strong trade ties with neighbouring regions, including a recent free trade agreement between India and the UAE and Bangladesh’s plans to establish more than 100 special economic zones by 2030.” 

Other drivers for trade growth include the Regional Comprehensive Economic Partnership, a 15-member agreement that UN researchers believe will redirect trade away from markets in the Americas and Europe, as well as the impact of the African Continental Free Trade Area. 

“Trade within participating markets is expected to grow at a higher rate than the overall trade growth in Asia, Africa, and the Middle East, at 5.8% for intra-regional exports and 5.6% for imports from 2021-2030,” the report says. 

Though exports from Asia to North America are likely to remain substantial in size, Standard Chartered says growth rates will slow as the latter becomes a “mature destination”. 

The report identifies several sectors where trade growth is likely to outstrip global averages. 

India’s vast oil refining capacity is identified as a driver for growth in metals and minerals exports, predicted to hit more than 7% by 2030, while the country’s imports of crude oil will benefit from a free trade agreement with the UAE.  

The report says this trend will likely see the UAE overtake Saudi Arabia as India’s largest supplier of crude. 

Though the UAE is expected to post significant growth in exports of crude oil, gas and petroleum products, efforts to become an industrial and manufacturing hub are tipped to drive imports of machinery and electricals by nearly 6% over the nine-year period. 

In Singapore, exports of machinery and electronics – particularly manufactured goods such as semiconductors – are expected to grow by 5.4%, while imports of intermediate goods will increase by more than 7%. 

Indonesia, Malaysia and Vietnam are also due to increase both imports and exports of machinery and electricals by at least 6.5%. 

 

Supply chain challenges 

Though these shifts in trade corridors could open fresh opportunities for businesses, Simon Cooper, Standard Chartered’s chief executive of corporate, commercial and institutional banking for Europe and the Americas, says more than 100 industry participants surveyed as part of the study “are struggling with the impact of rising geopolitical tensions, tariffs, inflation, and energy prices”. 

“To overcome these challenges, multinationals will need to become more ‘multi’-national than ever and build greater resilience and expand into these fast-growing nodes of global trade.” 

The report finds more than half of global business leaders are concerned that high and volatile commodity prices, coupled with rising geopolitical conflicts and tensions, will continue to disrupt supply chains. 

Around 45% of respondents say other concerns include poor infrastructure quality, high inflation, and trade barriers such as sanctions, tariffs and export bans. 

These challenges can impact each other, the report says. A difficult economic environment is likely to result in lower infrastructure development, in turn creating disparities across different economies and making it harder for businesses to expand into different markets. 

Economic and geopolitical disruption could also harm efforts to improve environmental sustainability. 

“The resulting deterioration in international cooperation on global issues, such as climate change, threatens to derail the net zero transition, exposing businesses engaged in cross-border trade to more radical climate risks in the future,” Standard Chartered says. 

Businesses should develop more agile, resilient and sustainable supply chains, rethinking their global footprint “to better align with the current geopolitical reality”, the report suggests. 

It finds that 88% of survey respondents have already established, or plan to establish, new sourcing hubs within the next two years, while 73% are sourcing inputs from a greater number of markets to diversify risks. 

Around two-thirds are sourcing goods regionally, increasing resilience while reducing carbon emissions, while around a third plan to realign their manufacturing footprint within two years.