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  • Report reveals preliminary signs of fragmentation in trade flows. 

 

  • Key findings 
    • Fragmentation in goods 
      • In 2023, intermediate goods trade was down 6% while trade in non-intermediates was flat.
    • Share of Asian trading partners in China ’s total parts and accessories declined slightly from (62.8% in 2019 to 60.2% ). 
    • Resilience of global trade is being tested by disruptions on two of the world’s main shipping routes:
      • Panama Canal: Handles 6% of global trade. It is currently operating at partial capacity due to freshwater shortages
      • Suez Canal:  Handles about 12% of global trade. It is the shortest maritime route between Asia and Europe. Trade is hampered due to attacks on vessels. 
      • Diversion of traffic around the Cape of Good Hope has added around 10 days to Asia-Europe journeys. 
    • Fragmentation in Services 
      • It is the possible impact of data flow disruptions
      • Evidence shows "friendshoring" in ICT services. US imports from Asia (mostly India) dropped to 32.6% from 45.1% , while those from North America increased.
      • ‘Friendshoring’ is a trade practice where a country’s supply chain networks are focused on political and economic allies.

 

Initiatives Taken to boost global supply chain and trade 

  • Supply Chain Resilience initiative (SCRI) launched by India, Japan and Australia
  • India-Middle East-Europe Economic Corridor for connecting India to the Gulf and Gulf to Europe.
  • Indo-Pacific Economic Framework for Prosperity (IPEF) to strengthen economic engagement among partner countries 
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