Where to look in a World of Global Procurement Opportunities?
The continued efforts by countries globally to compete and open their economies in a post-pandemic environment have highlighted the potential of some dynamic new markets that matter. Global trade was severely impacted early in the pandemic, and recovery was slow for many of the traditional global export leaders. However, markets in Asia and other developing parts of the world experienced a faster recovery, with some even seeing growth in their year-on-year exports in 2021. This trend continued in 2022, as more markets continued to grow their exports despite the many challenges in the current global sourcing environment. It is imperative that global sourcing managers observe the opportunity that these dynamic markets present, as they continue to increase their production capacity and exports of increasingly high-value products. Over the short to medium term, the war in Ukraine and China’s Covid related lockdowns present important additional challenges that must be incorporated in planning.
Shift in Global Export Rankings – New Winners, Losers, and some Holding Ground: Since 1990, the global top 30 exporter rankings have changed significantly. Economic growth within emerging markets, with special impetus given to export growth, have led to their rise in manufacturing and export rankings. In addition, there has been a strong link between deepening global interconnectivity, the rise of free trade agreements, and an increase in trade by new countries on the world stage. However, increasing global demand as well as strong exports growth, due to easing restrictions in 2021, led to an overall rebound in trade and commerce. What will the new landscape look like?
Trends: China, USA, Germany, and Japan have consistently been among the top 4 global exporters since 2005. However, there has been dynamic and constant readjustments below the top 4 rankings.
- USA, Germany, Japan, the Netherlands, France, and Italy remained in the top 10 throughout the period 1990-2021
- China, South Korea, and Hong Kong SAR appear in the top 10 from 2015 onwards, while Mexico has risen to #11 in 2021 (from #20 in 1990)
- Since 2005, Poland, Vietnam, Czechia, and Turkey entered as new top 30 challengers
- Between 1990 and 2010, South Africa and various EU countries (Portugal, Denmark, Finland, Norway, and Sweden) fell out of the top 30 to make room for the new challengers
- Indonesia fell out of the top 30 after 2015
- China became a WTO member in 2001, resulting in rapidly rising exports. Its gradual shift from producing and exporting low-end goods to high-quality, high-end manufacturing enabled it to remain at the top of the rankings since 2010
- China’s share of global exports further increased in 2021 as it grew its exports by almost 30%, while global exports rose by nearly 26%, bringing its share of total global exports to over 15% by the end of 2021
- Mexico’s rise from #20 to #11 makes it a key market – and one to watch going forward, even if its current main export destination is mainly focused on North America
- Vietnam entered the top 30 only after 2010 but already reached #22 by 2021 – a stellar rise compared to other countries. Sustained efforts aimed at increasing its manufacturing capacity and reducing its trade deficit has led it to not only benefit from a trade surplus in recent years but also improve its global ranking in exports by a compound annual growth rate (CAGR) of 15% from 2010 to 2021. In 2021, Vietnam’s export growth was 19%
- India, Australia, Poland, Czechia, and Turkey will likely be key markets to watch and countries such as Spain, Switzerland, Malaysia, and Thailand would need to defend their rankings
- Exports from China, the UK, Singapore, Taiwan (China), Australia, Poland, Malaysia, Saudi Arabia, Czechia, and Turkey in 2021 rose as their recovery efforts surpassed that of global growth, returning them to pre-pandemic levels of manufacturing and economic activity, and contrasting sharply with the rest of the world
- The previous 4.7% global trade growth forecast by volume for 2022 by the WTO has been cut to 3.2% in October 2022 due to “Global economic activity experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades.”