Mumbai - Three trade triangles centered around Asia are expected to contribute almost 40 percent of global trade by 2028 . These findings were shared by DHL, the world’s leading logistics company, as Hermann Ude, CEO, DHL Global Forwarding, Freight, participated in the APEC CEO Summit 2009 in Singapore.
In a research report shared by DHL, trade within three high-growth trade triangles is expected to shape the global economy. “Asia’
“There’s no doubt Asia and the emerging markets will shape the direction and future for economic and commercial expansion. If we look at the global logistics market in 1999, Asia’s share of it stood at 34 percent, or US$15.57 billion. By 2008 this figure had grown to US$339 billion, making up 46 percent – or nearly half of the worldwide market,” he added.
DHL identified core trade lanes driving growth in each of the three high growth triangles of trade. Within Intra-Asia trade, DHL expects China to be responsible for some 40 percent of trade, led by the import of raw materials into China and the exports of textiles, industrial machinery, telecommunications and office equipment and foodstuff. Of these, China’s trade with Korea, Taiwan, Japan, Hong Kong and Thailand will continue to dominate trade volumes. Rapidly growing is as well Chinese exports to India, Indonesia and Malaysia.
While at present, a significant part of the trade within Middle East-Africa-
Between 2008 – 2018, Latin America-Asia trade is also expected to grow 4.2%, more than double world trade growth at 2%, registering the fastest growth within the three growth triangles. Key lane growth between China and Latin America is expected at 5% during the same period aided by imports of metals, ores, animal feed, oil seeds mainly to China but also increasingly to India, Indonesia and Thailand, and China’s exports of manufactured goods – electronics, textiles, machinery.
The rise of the emerging economies, particularly Asia, and its role in shaping the global economy is the result of several converging trends.
1. Globalization
An increasing share of the global economy is attributed to the emerging economies, particularly Asia – the share of global GDP of Asian countries excluding Japan has increased from 9% in 1990 to 15% in 2008 and the trend is expected to continue. It is projected that the share of Asian economies (excl. Japan) in the global GDP will reach 20 percent by 2015.
2. Persistence of labor arbitrage
While labor costs in Asia will increase, labor arbitrage opportunities are expected to persist due to gains in productivity. As such, offshoring and global sourcing is expected to remain large in the next 10 years.
3. Shifting centers of labor and consumption
As the population in developed economies is getting older, a growing proportion of the labor force and new consumers will come from the emerging economies in Asia, Middle East, Africa and Latin America.
58 percent of the global population of people of working age is in Asia, a figure expected to remain stable until 2028. 15 percent of that comes from the Middle East and Africa and 14 per cent in the Americas. The Middle East is expected to account for 19 per cent by 2028, while the Americas will remain stable,. By contrast, just 9 percent of the population of working age is in Europe today, and by 2028, this figure will only be 6 percent.
Concurrently, a larger number of people from emerging economies will drive consumption. By 2015 more than 550 mn people in emerging economies will have an annual income higher than US$4,000 per year (GDP per capita at PPP). Translated to a household level, this implies a household income if US$12,000 to US$16,000, enough to fuel demand for things such as cars, consumer durables, tourism and higher education. China will contribute significantly to this rising middle class – 240 mn people, or 45% of the total, will live in China. Other Asian emerging economies will contribute further 15%, bringing Asia’s share of the emerging consumer market to 60%.
4. Emergence of Asia as the knowledge economy
A rising percentage of the population in Asia will have university degrees. In 2008, for example, 65% of university graduates came from Asia. Not surprisingly, 21% of the total graduated in China and 14% in India. Additionally, Asian countries spend an increasing amount on R&D. Corporations will increasingly see the opportunities in terms of talent management and knowledge ‘infrastructure’
5. Natural resources to remain drivers of trade
Asia’s economic expansion and China’s rapid growth in particular are drivers for the region’s hunger for resources. China’s approach towards trade – investments in exchange for mining rights will drive trade growth, especially between Asia and Africa.
“The search for resources and export markets is a key driver of Asia’s economic growth and expansion. Rich in natural resources, with a large population of youthful, increasingly well-educated workforce and a growing middle class – this is the era of Asia and the emerging markets of Latin America and the Middle East,” added Hermann Ude.
