IBSA: Trilateral trade surging, but economic relations still well below potential

by Dave

Engineering News:ZA

The figures are undoubtedly impressive. A total combined gross domestic product (GDP) in purchasing power parity (PPP) terms of more than $5,28- trillion, or 8% of the total global PPP GDP of over $65,6-trillion. A total population of more than 1,39-billion people, or just under 21% of the global population of more than 6,7-billion. These numbers show the combined weight of India, Brazil and South Africa (Ibsa), the three member countries of the Ibsa Dialogue Forum. Indeed, in PPP terms, India ranks as the world’s fifth-largest economy, Brazil as the tenth, and South Africa as the twenty-sixth – two global top ten economies in a group composed of only three countries.

Yet the trade between the three countries does not reflect this at all. According to a report commissioned by the Confederation of Indian Industries (CII), South Africa absorbed 1,78% of Indian exports last year, while Brazil took only 1,2%. In the other direction, South Africa provided 1,33% of Indian imports and Brazil, just 0,53%. South Africa ranked fifteenth as a destination for Indian exports, and Brazil, twentieth.

[India'] main exports to Brazil are petroleum-related compounds, chemicals, pharmaceuticals, textiles and fibres, machinery parts and components, and iron and steel, while its main imports are metal ores and slag, processed vegetable oils, nickel, iron and steel, chemicals, and machinery parts and components.

“To me, there is going to be a change in the dynamics of Indian trade,” explains CII director-general Chandrajit Banerjee. “India has had its traditional markets for many years. I find that India is going to have new markets to suit its own competences and competitive advantage as it is emerging today. And in the new emerging order of trade today, India will be engaging more and more with Latin America, and, therefore, Brazil, and Africa, and, therefore, South Africa, as well as other regions. South Africa and Brazil would be two of the most important engagements for trade for India.”

There are signifi- cant synergies between these countries as they have developed substantial capabilities in different sectors over many years . . . . The grouping holds out a bright future for the business community of the three countries to enhance their economic activities and cooperation in trade as huge opportunities exist in agribusiness, pharmaceuticals- biotech and healthcare, energy, biofuels, IT & ITeS (information technology and information technology-enabled services), infrastructure, mining, tourism and skills development.”

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