Global Trade Outlook Report

Context: Global Trade Outlook Report was launched recently by the UK’s Department of International Trade.

• This report sets out some of the long-term trends that are likely to shape the global economy and international trade in coming decades.
• A key uncertainty in the near-term is how countries will recover from the coronavirus crisis.

Key highlights
1) Import sector

• India will become the world’s third largest importer by 2050 with a share of 5.9% of global imports, right behind China and the US.
• This will be due to its growing middle class and rising discretionary spending.
• At present, India is ranked eighth among largest importing nations with a 2.8% import share and is set to become the fourth largest importer by 2030.
• The US’s and the EU’s share of most import sectors is expected to decline out to 2030.
• This due to growing purchasing power of Asia’s middle-class, which accounts for a rising share of global import demand.
• This change is particularly marked in the food, travel and digital services sectors.

2) Centre of economic gravity: Indo-Pacific

• Between 2019 and 2050, 56% of global growth is expected to come from the Indo Pacific, compared with a quarter from the EU and North America combined.
• Growth within the Indo Pacific is expected to rebalance over time, with South Asia’s contribution (driven by India) rising.
• The world’s centre of economic gravity is shifting eastward for decades due to the rapid growth in Indo Pacific.
• China is a major driver of this eastward economic shift & is expected to become the world’s largest economy by 2030.
• China already displaced the US in Purchasing Power Parity (PPP) terms (which account for differences in local prices) in the mid-2010s.
• India would be the world’s third largest economy in 2050, ranking just behind China and the US, with a share of 6.8% in global GDP.
• At present, India is ranked fifth in size of world’s economies with a share of 3.3%.
• India’s GDP is projected to cross Germany by 2030 to become the fourth largest economy.

3. Emerging economies

• The role of emerging economies in the trading system will rise over time, consistent with their growing weight in the global economy.
• The ‘E7 group’ is the group of the seven largest emerging economies—China, India, Brazil, Russia, Indonesia, Mexico and Turkey.
• They are projected to equal the G7 countries’ share of global import demand by 2050.