As global trade growth slows, African trade emerges as a key driver, reshaping regional and global dynamics, according to a report by BCG.
As the global trade landscape undergoes a transformative shift, marked by slowing growth and intensified regional ties African trade is poised to drive economic development. As traditional trade routes recalibrate, regional corridors assume greater significance. Boston Consulting Group’s (BCG) report “Jobs, National Security, and the Future of Trade” delineates these evolving trends.
Slower growth, deepening regional links
Global trade, once propelled by a fervor for globalization, is now evolving at a slower pace than the broader economy. BCG forecasts a 2.8% annual growth in goods trade vis-à-vis a 3.1% global GDP growth by 2032. This deceleration marks a departure from the historic trade-led globalism post-Cold War.
The rise of regional trade corridors
In this sea of change, regional trade corridors will gain in prominence, reshaping dominant routes like China-US and China-EU. Nikolaus Lang, managing director at BCG, says of these changes, “Global trade is shifting and the once-familiar map is being redrawn. As supply chains are rebalanced and neighboring countries solidify their regional trade relationships, we expect to see lasting changes in flows of goods around the world.”
Unveiling Africa’s trade potential
According to the report, Africa is emerging as a beacon of trade growth, propelled by rising prosperity, enhanced regional integration, and mineral-rich economies. Forecasts suggest a 3.3% annual trade growth by 2032, surging to USD 1.5 trillion.
“The next decade will be one of growth for African trade” said Tim Figures, partner and associate director at Boston Consulting Group. “But the continent’s trade will focus increasingly eastward, with countries such as China, India and blocs such as the Gulf Cooperation Council (GCC) representing some of the greatest trade increases.”
The report sees Africa’s trade with China, India, and the GCC rise, showcasing a promising landscape for both exports and imports. By 2032, trade with these entities is expected to surge, bolstering Africa’s economic footing on the global stage. Comparing 2022 to 2032, the change in trade of goods with China is expected to increase with 44% (to USD 265bn), 53% with India (to USD 118bn), and 61% with GCC (to USD 113bn), according to the report.
The full report also forecasts a fall in trade between China and the US, growing trade among North America, growing trade levels for ASEAN, India’s achieving of a 6.3% average annual trade growth and Russia’s trade with China and India growing while it’s trade with the EU is predicted to fall.
The full report can be read here.
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