Regional integration, supply chain shifts, and trade agreements fueled Asia's faster recovery and expansion.

Intra-Asia Trade Outpaces Global Growth

Intra-Asian trade expanded at an 8.9% compound annual growth rate (CAGR) from 2020 to 2024, nearly doubling the 5.4% CAGR recorded for global merchandise trade over the same period, according to analysis of UNCTAD and WTO trade data. The divergence reflects Asia's faster post-pandemic economic recovery and deepening regional linkages. Asia’s GDP growth was forecast at 5.9% in 2022 against 4.4% globally, providing the macroeconomic foundation for stronger trade performance.

CAGR (%) (%)Source: Orionmano Industries

Asia’s merchandise trade recovered faster than anticipated, growing 19.1% year-on-year by June 2021, as price levels recovered and volumes climbed. The region's swift economic rebound—driven by effective pandemic management in several economies and robust export demand—laid the groundwork for sustained intra-regional trade expansion through 2024. This pace of growth marks a structural acceleration: intra-regional trade in emerging East Asia accounted for roughly half of total export growth in the decade prior to COVID-19, and by 2021, intra-regional trade made up about 40% of the region’s total trade, the highest share since 1990 (Source 5).

Drivers: Trade Agreements, Middle Class, and Urbanization

Three structural factors underpin the acceleration in intra-Asian trade. First, demographics: an estimated 567 million people are projected to join the middle class in the Asia-12 economies by 2030, each demanding a greater variety of goods per capita. Second, urbanization: 209 million people are expected to migrate to Asia-12 cities between 2020 and 2030, driving demand for construction materials, household goods, and services (Source 2).

Third, policy frameworks have reduced barriers. The Regional Comprehensive Economic Partnership (RCEP), which entered into force in 2022, has expanded the scope of products covered under preferential agreements, digitally integrated customs processes, and helped mitigate potential geopolitical frictions. Specialized economic zones across the region are also facilitating greater trade. These initiatives have lowered transaction costs and enabled smaller firms to participate in regional supply chains (Sources 2, 3).

Country-Level Dynamics: China, Vietnam, and Southeast Asia

Trade flows among key Asian economies in 2024 exhibited a clear pattern of recalibration, with China playing a pivotal role. China's exports to Vietnam surged 12.7% in 2024, reversing a 7.5% decline in 2023, reflecting Vietnam's deepening integration into global supply chains as a manufacturing hub. Exports to South Korea rebounded 9.58% in 2024 after an 11.5% drop in 2023, driven by renewed demand for industrial goods and electronics components (Source 3).

Among China's export markets, the fastest growth in 2024 came from Laos (+17.7%), Cambodia (+14.6%), and Vietnam (+12.7%), underscoring how smaller ASEAN economies are becoming increasingly significant nodes in regional supply chains. Singapore (+6.1%), Thailand (+6.0%), and Indonesia (+0.3%) recorded moderate growth, while exports to Australia slipped 7.47% and to Myanmar contracted 17.6%, reflecting political instability (Source 3).

Thailand's intra-ASEAN exports illustrate the post-pandemic volatility: they peaked at $54.8 billion in 2022, then declined 10.29% in 2023 before rebounding 5.51% in 2024, indicating a recovery in regional demand tied to rising investment and production activity within ASEAN (Source 3).

A notable trend is Japan's continued diversification away from Chinese supply chains. China's exports to Japan fell 1.94% in 2024, following a 5.1% drop in 2023, as Japanese firms actively shifted sourcing to alternative regional suppliers, particularly Vietnam (Source 3).

Sectoral Drivers: ICT, Apparel, and Services

Trade in information and communications technology (ICT) products and apparel led sectoral growth in the third quarter of 2024. Trade in communication equipment grew 13% quarter-on-quarter, significantly outpacing the sector's modest 1% annual increase. Office equipment trade rose 13% quarterly and 15% annually, reflecting sustained demand for hardware supporting digitalization and remote work infrastructure. The apparel sector posted a robust 14% quarterly increase in trade—a sharp contrast to its 5% annual decline, suggesting a cyclical rebound in consumer demand late in the year (Source 7).

Asia's services exports rose 13% in 2024, outpacing Europe and North America, both of which recorded 8% growth. China was the main driver on both the supply and demand sides: the country's travel exports more than doubled in 2024, exceeding pre-pandemic levels by 7% for the first time. This rebound in services trade—particularly travel and other commercial services—provides an additional growth vector beyond merchandise trade (Source 4).

Outlook

Intra-Asia trade is expected to continue expanding, supported by ongoing supply chain reconfiguration, digitalization of customs and logistics, and the continued rise of Asia's middle class. The World Trade Organization projects that Asia will contribute approximately 1.3 percentage points to the projected 2.9% growth in global exports in 2024, or roughly 45% of total export growth (Source 6). However, risks remain. Geopolitical tensions, potential global economic slowdowns, and the fragmentation of supply chains could temper growth. Exports to Myanmar contracted sharply in 2024, and declining trade with Australia signals that not all regional relationships are strengthening uniformly. The trajectory will depend on whether policy frameworks like RCEP can continue to mitigate disruptions and whether consumption demand from Asia's expanding middle class sustains its current momentum.