The Rise of Southeast Asia in the New World Trade Order

Countries in Southeast Asia will be among the primary beneficiaries of the shifts occurring in global trade over the next decade.

This advantage comes as a result of restructuring production chains following the COVID-19 pandemic and the conflict in Ukraine, according to a study conducted by Boston Consulting Group (BCG).

Trade in the region is expected to grow by approximately $1.2 trillion over the next decade due to its emergence as a key destination for companies aiming to reduce reliance on China, according to the annual report of this global consulting firm.

Over the past three years, global trade has been significantly impacted by the health and geopolitical context. This includes the escalating economic standoff between China and the United States, according to reports from Agence France-Presse.

The Southeast Asian region (ASEAN) is seen as an attractive alternative to China due to its young and dynamic population, its diverse economy, and its neutrality in geopolitical conflicts. The study that highlights this observation employs a methodology that considers historical data and artificial intelligence techniques to make projections about ten countries.

Elaborating further, trade between China and the rest of the world will be impacted by an increase in trade barriers, according to the consulting firm. Trade between China and the United States is expected to decrease by $197 billion compared to the year 2022, which is three times more than what was predicted by BCG last year.

On another note, trade with Europe should continue to expand, but at a slower pace than before.

Strengthening trade ties with nearer partners, as well as diversifying supplies, is also likely to boost Europe’s trade with the United States, which is expected to increase by 38% according to the study. Similarly, trade with India is anticipated to grow by 66% and with Turkey by 23% by the year 2032.

On the other hand, for Russia, which has been engaged in warfare for nearly two years in Ukraine and has seen its trade with the West diminish, trade with the European Union is bound to decline by approximately $222 billion. However, in contrast, it is expected to significantly increase with China and India.