-: Global trade has been going through a volatile
and tectonic shift over the last decade or so,
but global trade has also become
deeply intertwined with geopolitics lately.
We built a trade model
using half a billion data points
by product, by countries, to really see
how the trade flows are changing.
We've also forecasted it for the next ten years.
There are a few themes that emerge.
Now, underlining all of that theme
is one of the key changes
that's happening in trade between US and China.
Trade between US and China has been shrinking
for the last few years,
and will continue to shrink over the next decade.
Now, that will get substituted with new trade routes,
and here is where the opportunities come.
We see four major themes.
The first theme is around the resilience
of the North American bloc.
US, along with their allies,
is creating a new set of trade routes,
and what we see is trade of US to the world
is still growing.
That means US is resilient.
Only the trade lanes are substituting from China
away to Mexico, to ASEAN, to India, and so on.
So the first theme is around North American resilience.
The second theme is around China's own pivot.
China very much still remains the factory of the world.
Over 35% of global production is in China,
and therefore, China needs a market for those products.
Therefore, they are pivoting to nations
of the Global South.
We forecast that China trade
with the Global South will grow nearly 6% per year.
The third theme is around the Global South itself
to be a member of global manufacturing
and global supply chains.
For this, they need to trade with each other
and trade with the Global North.
Trade between South to South
in the Global South countries
is going to grow nearly 4%.
This offers opportunities
for emerging markets around the world.
The final theme is around the EU.
EU is going through its own substitution;
was trading a lot with Russia in the past,
which cannot happen now,
so therefore, EU's trading much more with the US.
But we are also seeing themes
around EU pivoting towards Africa,
towards Middle East and other emerging markets
to create new trade relationships.
What does this mean for businesses and governments?
Those of you who are shifting your supply chains,
think about where you should shift it to,
and how to make them more robust,
more cost effective, and more resilient.
For those of you who are not thinking
of shifting your supply chains,
think about how much it might cost you in the future
as these trade lanes evolve
and as geopolitics unfolds.
Regardless of where you are, global trade matters.
Watch it carefully.
(gentle upbeat music)