Friendshoring a worrisome trend; Indian economy to get bigger over time: WEF President

Decoupling may result in the global economy losing out substantially in terms of economic growth, the head of the World Economic Forum (WEF) has warned.

“Decoupling could lead to the world losing 8-10 per cent in economic growth,” Borge Brende, President of the Cologny (Switzerland)-headquartered autonomous body for public-private cooperation said on the opening day of the B20 Forum in New Delhi Friday.

Brende also questioned the rationale behind ‘friendshoring’, a growing trade practice where supply chain networks are focused on countries regarded as political and economic allies.

“Let countries buy from places where they find value. The future prosperity of the world is dependent on the growth in global trade,” he said.

Many are apprehensive that the move towards friendshoring risks furthering deglobalisation or geo-political fragmentation.

“Friendshoring is worrisome as how do you define your friends? There are very fine balancing acts that we are faced with. We will only realise the value of global value chains when the [economic] growth stops,” observed Brende.

To further buttress his argument, he pointed out that countries who moved up from the lower income to the middle-income bracket could achieve that only by opening their markets greater competition.

The WEF president, however, said that he remained very optimistic about India’s growth potential as the country was currently witnessing the snowball effect.

“As the snowball rolls, it only gets bigger and bigger… In a few years, it’s going to be the third-largest economy in the world.”