The Ernst & Young report prepared in conjunction with Oxford Economics is titled “Trading places: The emergence of new patterns of international trade.”
It showed that Asia-Pacific will experience the fastest growth in global trade to 2020 and intra-regional trade there will lead to a renewed concentration of international demand.
According to the forecast, although global trade was severely restricted during the financial crisis, it has since bounced back strongly, led by trade amongst emerging markets.
It says global trade was dominated by the advanced nations at the start of the 1990s but their share has declined markedly and this trend is set to continue with ever more speed through to 2020.
As Europe’s share of global exports will decline, from 38% in 2010 to 34% by 2020, the forecast disclosed that Asia will continue to be the most dynamic region in terms of trade, with the fastest growth of exports in goods occurring within the region itself driven by India and China will account for almost one-fifth of global trade flows by 2020.
Commenting Jay Nibbe, Europe, Middle East, India and Africa Markets Leader at Ernst & Young, said “While the advanced economies muddle through the financial crisis the rapid-growth markets are going from strength to strength and are an increasingly significant part of the global economy. They will become an even more dominant force in global trade and as a result businesses are going to have to adjust their strategies to reflect the increasingly regional pattern of world trade that is developing and will intensify over the next decade.”
On regional patterns of trade, Ernst & Young said new markets for exports are also opening up within Middle East and North Africa (MENA) and sub-Saharan Africa as economies grow in size.
“Total exports to these regions are forecast to grow more rapidly than exports to the US, Europe, Japan and the rest of the Americas,” it said.
The forecast, the accounting firm said, suggests that European exporters will capture around one quarter of the growth in final demand from sub-Saharan Africa, but exporters from Asia will capture close to half of this growth.
Strong investment by other emerging markets and China in particular, may facilitate the strong growth that Africa needs, it observed.
Europe’s exports to Africa and the Middle East at more than $900 billion will be around 50% larger than its exports to the US, it forecast adding “Europe will be the most important market for sub-Saharan Africa’s exports, accounting for a quarter of all its trade.”
However, Ernst & Young is of the view that the overall size of the flow from sub-Saharan Africa to Europe will still be relatively small at $108 billion.
In Latin America, the forecast noted that plentiful natural resources and strong foreign direct investment (FDI) inflows will enable improvements in productivity to support potential growth.
By 2020, it predicted that Latin America’s and the Caribbean’s exports to the US at around $769 billion will be slightly larger than Europe’s exports to the US.
By Ekow Quandzie