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Asia and Europe: Strengthening a relationship
Despite the considerable global challenges, trade opportunities between Asia and Europe – two of the world's most significant economic regions – are primed for unparalleled growth.
A new report from HSBC's Global Trade Corridors series provides insights into the promising opportunities and risks inherent in the dynamic Asia-Europe trade corridor. Download the report today and learn more about how cross-sector industry disruption, environmental concerns, and geopolitical risks are shaping a new global economy. In this evolving landscape, the Asia-Europe corridor emerges as a crucial player.
A tale of two continents
Asian regions, including China, India and ASEAN are primed for considerable growth, with forecasts until 2028 projected at an average of 4.5%. Meanwhile, growth in Europe’s major economies is less promising, with average projections at between 0.9%-1.7%. These differing stories are encouraging for the Asia-Europe trade corridor, as it will likely be particularly important for Europe to strengthen its economic growth through solid Asian trade relationships.
Strong foundations
Trade data already demonstrates the foundations of a robust trading relationship along the Asia-Europe corridor. However, the dynamics are continually shifting. Asia's dependence on Europe's exports is decreasing, while in contrast, European dependence on Asian imports is rising. And when it comes to the top key markets supplying Asia, businesses will be interested to know that in 2022 these included Germany, France Switzerland, Italy and the UK – with Germany’s import value reaching nearly $300 billion. In reverse, major players supplying Europe were China and Japan, with Chinese imports totalling a whopping $978 billion. Strong foundations indeed.
Need for agreement
Additional trade agreements between Asia and Europe are necessary to foster further growth and while there is some progress in this regard, particularly in relation to Free Trade Agreements, more efforts are needed. The EU is currently negotiating trade agreements with India and Indonesia. However, negotiations have stalled on an EU-China investment agreement, something of a concern given China's status as the largest Asian economy.
Investing in digital economies
In 2022, China launched a 5-year plan to bolster its already-dominant digital economy. The plan aims to drive national digital transformation and open doors for businesses and investors from outside the country, leading to increased FDI inflows. European multinational enterprises have been instrumental in driving growth in this area so far, particularly in manufacturing and high-tech industries. Indeed, European investors will also find many opportunities in ASEAN’s digital economy, which was worth almost $200 billion in 2022 and is forecast to rise to $330 billion by 2025.
Sky-high potential
Despite a challenging macroeconomic and financial climate in Europe, investor sentiment remains positive. Major economies in Europe present a $660 billion potential for Asian exporters, while China, India and ASEAN present a $482 billion trade potential for European exporters in Asian markets. One crucial opportunity has arisen due to the Regional Comprehensive Economic Partnership – the world’s largest Free Trade Agreement between Asia-Pacific and ASEAN states. Considering these countries account for around 30% of global GDP, the potential for European businesses could be sky-high.
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