India-Russia Trade May Increase Despite Global Trade To Face Stagnant Decade: Report

International trade will grow more slowly than the global economy for the majority of the next decade as the war in Ukraine reshapes strategic alliances and alters the flow of cross-border commerce, according to a new report.

According to Boston Consulting Group, the annual growth rate of global trade will average 2.3 per cent through 2031, compared to an increase in global GDP of 2.5 per cent on average over the same period.

During the decade preceding the pandemic, trade closely tracked the global GDP growth rate.

As a result, the report forecasts the worst period of stagnant globalisation since the World Trade Organisation was founded more than a quarter-century ago.

“We are in the midst of a new East versus West dynamic, with a US and EU-led community and a China-Russia counterpart, as well as the potential emergence of a third grouping of non-aligned nations,” said Nikolaus Lang, a BCG managing director and coauthor of the report.

According to BCG's forecast, the European Union will increase its trade with the United States by USD 338 billion, largely due to increased American energy exports to Europe. It will also increase its combined trade with ASEAN countries, Africa, the Middle East, and India.

Trade between the United States and China will fall by USD 63 billion. Trade growth between the EU and China will also slow, increasing by only USD 72 billion, which BCG describes as a “modest increase compared to previous years.”

Russia's trade with China and India will increase by USD 110 billion, “including USD 90 billion with China alone,” according to the consultancy.

Southeast Asia will be the primary winner, with an estimated USD 1 trillion in new trade tied primarily to new commerce with China, Japan, the United States and the European Union.

ASEAN trade with China will increase by USD 438 billion, the largest interregional increase in history.