Global trade outlook: executive summary
Updated 1 October 2021
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1. Preface
The Department for International Trade’s new global trade outlook explores the long-term trends that will shape the global economy and international trade in the coming decades.
The long-term projections in the global trade outlook (henceforth referred to as the Outlook) are not predictions of what will happen, nor what HM Government (HMG) would like to happen – the Outlook does not include any judgements about the future efficacy of HMG policy. Rather, the projections are one possible future that could emerge based on an informed analysis and neutral extrapolation of the trends we observe today. The projections are a rough guide to how the world could evolve – not a definitive road map it will follow.
There are many economic, political, technological, and environmental risks and uncertainties that could materialise over the coming decades that could cause global trade to diverge from the projections in the Outlook. A key uncertainty in the near-term is how countries will recover from the coronavirus crisis. Since the Outlook is focused on the longer term, we abstain from making judgements about the near term by tying our 2021-2026 projections to the International Monetary Fund’s April 2021 World Economic Outlook forecasts. In addition, all UK projections are consistent with the independent Office for Budget Responsibility’s March 2021 forecasts in the near term and long-term projections out to 2050 to avoid making any judgements about HMG policy.
The Outlook has been produced to help inform policymakers and strategists and contribute to the wider debate about the future of trade. But it is just one source among many. The Department for International Trade continues to draw on a wide range of analysis and information when formulating its strategy.
2. Economic backdrop
Global GDP will continue to expand over the coming decades, but at a slowing rate. Slower population growth and ageing workforces will weigh on growth.
The world’s economic centre of gravity will continue to shift eastward. The 7 largest emerging economies are projected to overtake the G7 in economic size during the 2030s.
The industrial structure of the global economy is expected to gradually become more services-oriented, as rising incomes in emerging markets shift spending patterns. By 2030, service sectors are expected to account for 77% of global GDP, up from 75% in 2019.
As living standards rise, the number of high-income countries could go up from 60 in 2019 to 70 by 2030. The world’s growing middle class will also be a key source of demand. By 2050, there could be 2 billion more middle class consumers on the planet.
The UK was the 6th largest economy in the world in 2019 and is projected to remain broadly in that position out to 2050. As living standards rise overseas – particularly in emerging markets – the UK’s share of global GDP is projected to fall from 3.3% in 2019 to around 2.7% by 2050. As the rest of the world grows richer, the UK’s relative economic weight will tend to fall but the opportunities for the UK to grow via trade will increase.
3. Trade outlook
Global trade is projected to grow broadly in line with global GDP over the next 30 years – doubling in real terms and quadrupling in dollar terms to reach $100 trillion by 2050.
Emerging economies are also likely to account for a growing share of trade as economic power shifts east. The 7 largest emerging economies are projected to match the G7’s import market size by 2050.
The industrial structure of global trade is very different to GDP – goods sectors dominate trade. But trade is also expected to gradually become more services-oriented over time. By 2030, service sectors are expected to account for 28% of global trade, up from 25% in 2019.
Global trade is concentrated among high-income countries. In 2019, two thirds of global import demand came from the world’s 60 high income countries. By 2030, as 10 more countries graduate to high-income status, this share could rise to four-fifths of global import demand.
The UK should remain one of the top 10 trading nations in the world out to 2050. UK exporters are well-placed to capitalise on the growth of the global middle class as richer populations tend to buy more of the high-value goods and services that UK businesses specialise in. Nevertheless, rapid trade growth in other regions means that, assuming past trends continue and absent policy changes, the UK’s share of global exports is likely to fall – from 3.6% in 2019 to around 2.6% by 2050.