Decoupling from GVCs would lead to 10% loss in global GDP: WEF President

World Economic Forum President Borge Brende stated on Friday that the complete decoupling of world economies from global value chains (GVCs) would lead to an 8–10 per cent fall in global gross domestic product (GDP).

“This is more than what the worst depression had led to,” he said. “So, there’s a lot at stake, and India, during its (G20) presidency, should look at how to secure the global value chains, a key engine of future growth,” he added. 

Brende made these comments while speaking at the session on ‘Inclusive GVCs for Resilient Global Trade and Investment’ at the B20 Summit India 2023 in New Delhi.

Brende emphasised that future prosperity and poverty eradication will rely on open trade and strong GVCs that must be inclusive and adjusted for climate change.

“There’s a great deal of optimism in India, which is also the foundation of India’s Presidency of the G20. India has been the fastest-growing economy for three years in a row amid sluggish global growth. India will be the world’s third-largest economy in a few years, and it is vital for India to continue reforms, build better infrastructure, and invest in education,” he said.

Sultan Ahmed Bin Sulayem, group chairman and chief executive officer, DP World, UAE said, "We are proud to support India’s G20 legacy and national priorities around energy-efficient infrastructure. These will support India’s ambitions to become a global manufacturing and export hub."

"More and more countries are signing agreements to fast-track customs clearances through the Authorised Economic Operator program of the World Customs Organisation. This qualifies certain companies in both countries for fast-track clearances. The UAE has signed such an agreement with India, as well as Korea.  We would encourage more such agreements between countries to be signed, because if customs in various countries can co-ordinate with one another then global trade will be a lot more efficient," he added.

Raj Subramaniam, president and chief executive officer of FedEx, USA, highlighted that the resilience of the global value chains must be backed by efficiency, or it could lead to inflationary costs. Subramaniam added that this can be achieved with the aid of technology and by making supply chains smarter.

“Diversification of supply chains is quite nuanced and complicated. There is an opportunity to increase global manufacturing in India, further reducing logistics costs due to the benefits of scale,” he added.