Marc Gilbert, managing director of the Industrial Goods and Consumer Practices of Boston Consulting Group, reveals the findings of the firm’s latest report on global trade growth, and discusses the factors that will shape the future of trade.

The latest BCG report on global trade finds an 8% drop from 2020 — not a positive result, but better than the double-digit decline that both the firm and the World Trade Organization had projected for 2021 during the “darkest days” of the pandemic.

BCG is generally bullish on the prospects for trade, expecting it to return to its level of 2019 by the end of 2022 or early 2023, then growing by roughly 2.7% per year after that.

All major trade corridors will experience steady growth except for one: between the U.S. and China. Gilbert says BCG sees a gradual transition to stronger manufacturing activities in Southeast Asia at the expense of China. But change will be slow, given the complexities of relocating plants and supplies. In addition, he says, Southeast Asian nations will need time to develop the infrastructure necessary to produce goods on the scale of China and Taiwan.

A reshoring of manufacturing from China to the U.S. is also underway, driven in large part by technology firms, as producers look for alternative sourcing. But the ultimate level of that shift remains to be seen.

In developing its report, BCG looks at five main factors that could affect the evolution of trade in the coming decade: the shape of the post-COVID-19 recovery, changes in geopolitical dynamics, the pace of decoupling of the U.S. and China’s trade relationship, a lack of emergence of trade agreements and accompanying mechanisms for dispute resolution, and various government policies for achieving national well-being.