Trade and Economic Integration

This chapter examines the issues pertaining to international trade and economic integration in the region. After a notable drop in global merchandise trade during the global financial crisis in 2008–2009, global trade flows rebounded strongly since 2010. While the economic conditions continued to improve in both developed and developing economies, the recovery of both trade and output proceeded more slowly in developed countries. The trade growth in Asia was mainly driven by the fastest-growing economies in the region, such as China and India. However, a notable reduction in world merchandise trade was again witnessed during the COVID-19 pandemic before making another strong recovery in 2021. Most countries in the region have demonstrated a slower integration with the world economy. In particular, the speed of integration has substantially slowed down in the South Asian region during the pandemic, with the slowest integration seen in Bangladesh and Sri Lanka compared to the Southeast Asian countries under consideration. India has dominated the trade relationships in the region, with the most notable growth in trade seen between Bangladesh and India compared to any other pair of nations.