The impact of supply chain shifts on economic growth in India and Vietnam

We set up a framework to analyze the potential growth implications for India under various scenarios in which the country gains market share in global merchandise exports.

We believe that if the “China +1” supply chain shift continues, India could benefit from government reforms and rising foreign direct investment, which could help India achieve 6.25%-6.75% year-on-year growth by 2030 and even 6.75%-7.25% year-on-year growth in our optimistic scenario. For India, the increase in direct jobs could reach 1 million to 4 million per year (with a similar indirect impact).

Vietnam has been growing as a stable manufacturing hub. We expect continued supply chain shifts to play an important role in helping the country achieve its development target of 7.0% annual GDP growth in 2021-2030.

X20CP1486

Future supply chain

Global supply chains will become increasingly diverse. China is the second largest consumer market in the world, so this will help keep production lines in Asia. At the same time, supply chain diversification may not be a loss for China, which has been accelerating its climb up the value chain.

Competitive advantage, proximity to the Chinese market, and rising regional economic growth are the key advantages of the Asian market today.