Emerging economies are now the leading supplier of commodities as a growing middle class powers demand, UAE Minister of State for Foreign Trade Dr Thani Al Zeyoudi has said.
The shift shows the changing dynamics in the world's economy and increases competition in the multitrillion-dollar trade of global commodities, the Hili Forum in Abu Dhabi heard on Monday.
China, the world's second-largest economy, is among those “supplying the world”, Dr Al Zeyoudi said.
“Europe is not anymore one of the main suppliers of the main commodities – it's becoming the emerging economies,” he said in a panel discussion.
The change comes down to the growing middle class in the Global South, Dr Al Zeyoudi added.
The Global South and Global North are terms used to group countries based on their socioeconomics and politics.
The Global North comprises North America, Europe, Japan, South Korea, Australia, New Zealand and Israel, while the Global South groups Africa, Latin America and the Caribbean, plus the parts of Asia and Oceania not included in the Global North.
A similar trend is also happening in terms of globalisation, with blocs comprising emerging economies becoming leaders, Dr Al Zeyoudi said.
“Globalisation before was about dealing with blocs and extending it to the rest of the world, and now we are redefining what the blocs are and what regions we're talking about,” he said.
Asean Plus – the 10 South-East Asian nations with China, Japan and South Korea – and Brics, comprising Brazil, Russia, India, China and South Africa, are at the forefront of globalisation, the forum heard.
“Globalisation is going to continue, but fragmentation is happening … global blocs before were the EU and the conventional ones, which are closer to the big powers. But now … Asean Plus and Brics are becoming the new economic corridors,” Dr Al Zeyoudi said.
Commodities are key to the global economy as they are used to manufacture consumer products and play key roles in other goods and services.
They are broken down into two main categories – hard commodities, comprising energy and metals products, and soft commodities, most often agricultural products.
For investors, trading in commodities can be a source of wealth and a hedge against inflation.
The value of the global commodities market is projected to hit about $121 trillion this year, rising to $136.8 trillion by 2029 at a compound annual growth rate of 2.45 per cent, data from Statista Market Insights shows.
Energy products will lead the global commodities market this year with a value of about $48.6 billion, followed by agricultural products at $33 billion, it said. Both are expected to maintain their positions throughout the decade.
Meanwhile, the global economy has been increasingly influenced by emerging markets over the past two decades, according to the International Monetary Fund. Emerging markets have become much more integrated with global markets and are generating larger economic “spillovers” to the rest of the world, the IMF added.
Faster growth in emerging markets can also mean an expanded capacity to make and export new goods that compete directly with those made in other countries, the IMF said in a report in April.
Zhang Yiming, China’s ambassador to the UAE, urged to address the issue of using trade to gain unfair advantages given the “unprecedented global transformation” seen since Covid-19.
Addressing the forum, he highlighted the rise of protectionism and unilateralism, as well as a “few countries still constantly speaking of sanctions for suppressing China”.
“The world has been, unfortunately, seriously divided now by the pandemic, as well as by the escalation of geopolitical tensions,” Mr Zhang said. “We see countries that have weaponised economic issues instead of working together to address global issues like climate change.
“China, as well as the UAE and many other countries, stand for the better to demonstrate compassion and commitment to international responsibility for a better world.”
Abdulnasser Alshaali, the UAE's Ambassador to India, said co-operation between emerging economies can also play a key role in streamlining global trade.
“You have to make sure that whatever agreements, whatever mechanisms you have in place are also evolving” to fit today's changing economic landscape, he told The National at the event.
